Advanced LBO Modeling

This course is a more thorough treatment of the standard LBO course covered in the Premium Package, and is designed for investment banking and private equity professionals who want to take their LBO modeling skills to the next level. Trainees build a full LBO model with stock vs asset sale toggles, multiple tranches of debt, PIK toggles, and sophisticated deferred tax and depreciation schedules.

Provider: Wall Street Prep
Difficulty: Very difficult
Rating: 4

What You Will Learn

Learn how an LBO / Recapitalization works given today’s benchmarks and credit environment, Develop an “industrial strength” comprehensive, and integrated LBO model, with multiple operating scenarios, Integrate switches – Standalone vs. LBO vs. Recap model; Toggle between tax and valuation implications of asset deals, (338(h)(10) election, and stock sale; Gain the confidence to ace your private equity interviews

Modeling LBO debt: Senior, Revolver, Sub, Mezz, and Pref stock. Model PIK vs. cash interest and dividends, etc.; Building the LBO Sources & Uses (S&U) Schedule – the correct way; Analyze IRRs for sponsors, management, preferreds, and mezzanine; Add complex Depreciation / Tax / NOLs / Deferred Tax / Working Capital / Amortization schedules; Use as a reference to get ahead on the job and in your career.

Couse structure

Introduction to LBO and recaps

  • How does an LBO or Recap work?
  • Who are the major players?
  • What is the current financing environment?
  • What are the industry benchmarks?

LBO model development

  • Pro forma financial statement projections
  • Line-by-line build-up of the IS / BS and CFS
  • Elegantly model LBO and recap adjustments
  • Model LBOs as asset sales vs. stock sales
  • Integrate asset write-ups and associated deferred taxes
  • Toggle switches
  • Transaction type: Standalone/LBO/Recap
  • Tax type: Asset sale / (338(h) (10) election / Stock Sale
  • Operating sensitivities: Best case / Base case / Weak cas
  • Modeling LBO debt
  • Senior & subordinated notes – discretionary and required payments for multiple tranches
  • Mezzanine finance – PIK vs. cash interest
  • Preferred stock – PIK vs. cash dividends
  • Revolver – Integrated automatic cash sweep, minimum cash balance, and maximum borrowing capacity
  • Building the LBO sources & uses (S&U)
  • Build a heavy duty, yet flexible, sources & uses of funds schedule
  • Make adjustments in one place – watch it flow error-free throughout entire model
  • LBO returns and exit analysis
  • Sensitize IRRs (using XIRR) for:LBO Sponsors
  • Management Rollover
  • Mezzanine Lenders
  • Preferred Shareholders
  • Build complex schedules that can be turned on or off depending on the availability of client data Working capital
  • Depreciation
  • Amortization
  • Taxes / NOLs / Deferred taxes
  • LBO modeling best practices
  • Circularity breaker and error trapping – no more DIV#0 and REF#!
  • Scenario analysis
  • Data validation
  • MATCH, OFFSET and INDEX functions for improved analysis

Additional recognition

This program is eligible for 35 PD credit hours as granted by CFA Institute.


The course is self-paced and anyone is welcome to enroll. It does not assume a prior background in LBO Modeling. However, those who select this course should possess knowledge in:

  • Accounting: The program assumes a basic introductory knowledge of accounting (e.g. interaction of balance sheet, cash flow, and income statement). Students with no prior background in Accounting should take the Accounting Crash Course (included in this package).
  • Corporate Finance: Although general exposure to corporate finance is helpful, it is not required.
  • Excel: Basic introductory Excel knowledge is highly recommended. Students with limited or no experience using Excel should take the Excel Crash Course (included in this package)