LBO Model Training

LBO Modeling — Advanced Course

Leveraged Buyout | Debt Schedule | Returns Analysis | ManufacturingCo Case Study

Course Overview

This course builds a complete, interview-ready Leveraged Buyout (LBO) model from scratch. You will learn how private equity firms structure acquisitions using debt, how to project operating performance, how debt is repaid through a full debt schedule with cash sweep mechanics, and how to calculate equity returns using IRR and Money-on-Money multiples. The course follows ManufacturingCo LLC — a $1.05 billion acquisition — through every stage of the LBO process.

By the end of this course, you will be able to build a fully integrated LBO model, explain every formula and its economic rationale, and answer the most demanding LBO questions in private equity and investment banking interviews.

What You Will Learn

• How leverage amplifies equity returns — and losses — with real numerical proof
• How to structure Sources & Uses and verify the deal balances
• How to build a 5-year operating model projecting EBITDA, EBIT, Net Income, and Levered Free Cash Flow
• How to roll forward three debt tranches (TLA, TLB, Senior Notes) with mandatory amortisation and optional cash sweep
• How to calculate IRR, Money-on-Money (MoM), and build a value creation bridge decomposing EBITDA growth, debt paydown, and multiple expansion
• How to run sensitivity analysis across entry multiples, exit multiples, and revenue growth scenarios
• How to interpret credit metrics — leverage ratio, interest coverage, fixed charge coverage — as a lender would
• Advanced mechanics: PIK notes, dividend recapitalisation, circularity resolution

Course Structure

ModuleTopic

1 LBO Fundamentals — What, Why & Who

2 Sources & Uses — Deal Structure & Leverage Statistics

3 Debt Tranches — TLA, TLB, Notes & Seniority Waterfall

4 Operating Model — 5-Year P&L & Levered FCF

5 Debt Schedule — Amortisation, Interest & Cash Sweep

6 Returns Analysis — IRR, MoM & Value Creation Bridge

7 Sensitivity & Scenario Analysis

8 Credit Analysis & Covenant Mechanics

9 Advanced Topics — PIK, Dividend Recap, Circularity

10 Excel Model Guide — Before & After Tabs

11 Common Mistakes & Interview Traps

12 Q&A Bank — 40 Advanced Interview Questions

13 Glossary — LBO Terms & Structures

Case Study — ManufacturingCo LLC

A private equity firm acquires ManufacturingCo at a 7.0x EV/EBITDA entry multiple for $1,050mm, financing the deal with $650mm of debt (4.3x leverage) and $440mm of equity. Over a 5-year hold period, EBITDA grows from $150mm to $231mm, debt is systematically repaid through free cash flow, and the firm exits at a 7.0x multiple — generating a 2.8x MoM and 22.6% IRR in the base case.

Excel Model — What's Included

The course includes a fully built Excel workbook with 14 tabs and 297 formulas:

• Before tabs — student practice with ??? placeholders and formula hints
• After tabs — complete answer keys with all formulas and cross-sheet links
• Sensitivity tables — IRR across entry × exit multiples (traffic-light coloured)
• Q&A Bank — 40 questions embedded directly in the model
• Glossary — 30 LBO terms with definitions and formulas

Who This Course Is For

• Investment banking analysts and associates preparing for PE interviews
• Private equity professionals building or reviewing LBO models
• Corporate finance practitioners who want to understand how PE thinks
• MBA students and CFA candidates studying leveraged finance
• Anyone who has completed a 3-statement model course and wants to go further

Prerequisites

A working knowledge of the Income Statement, Balance Sheet, and Cash Flow Statement is assumed.

Familiarity with basic Excel formula building (cross-sheet references, IF, MAX, MIN) is recommended.

Completion of the Sutras 3-Statement Financial Model course is ideal but not required.

Level: Advanced

Format: PDF Study Guide + Excel Model (Before/After)

Q&A Bank: 40 Interview Questions with Full Model Answers

Case Study: ManufacturingCo LLC — $1.05 billion LBO