LBO & Merger Modelling
This practical computer based 3 day course is designed to provide you with an in-depth understanding of LBO and merger modelling methods in order to make effective business decisions based on sound valuation of businesses.
You will have a chance to learn about the core concepts of the LBO and merger modelling, establishing the financing and structuring of a deal, modelling various types of acquisitions and disposals as well as assessing the debt capacity of a company.
You will gain the tools to value and account for a merger of two businesses and explore the concept of synergy valuation.
By the end of the training you will be able to:
Prerequisites: To attend this course, participants should have an intermediate knowledge of accounting, a good working knowledge of financial modelling and Excel and a good understanding of traditional valuation methodologies.
Delegates are expected to bring a laptop with Excel. If necessary we can provide one for an additional fee.
What Will You Learn
Main Topics Covered During This Training
Who Should Attend
Participants requiring an understanding of LBO and combination valuation techniques and how corporate transactions are analysed and valued should attend this course.
From Corporates, Investment Banks, Private Equity, Consulting, Accounting and Legal Companies:
LBO & Merger Modelling - Combination Valuation - 3 day course
Day 1: LBO Modelling - Hybrid Valuation
Leveraged buyout analysis
- Basic principles of LBOs
- Introduction to players and financing instruments
- Drawing the distinction between DCF and LBO analysis
- The key drivers in an LBO valuation
- Free cash flow for debt paydown
- Assessing IRRs
Exercise: Summary analysis, participants produce an LBO valuation from a forecast cash flow
Modelling the LBO
- Sources & uses
- Simple income statement and cash flow forecasting
- Management case
- Bank base case
- Payout case
- Debt modelling
- Rates, ratios, covenants
- Payback: amortisation vs. cash sweep
- Exit and returns analysis
Case study: Participants build a basic LBO analysis from scratch
Assessing debt capacity
- The key ratios used in analysing debt capacity
- How to improve the debt capacity for a business
- Bank priorities and the way in which debt is priced and managed
Case study: Participants assess the debt capacity for a company
Structuring the debt package
- How is the debt package structured?
- Senior debt tranching
- Second lien debt
- Subordinated debt
- Payment in kind (“PIK”)
Case study: Participants add further features into the LBO model, including different debt payment schedules and PIK instruments
Day 2 & 3: Merger Modelling
Corporate transaction theory
- Transaction theory and rationale
- Why transactions work
- Why transactions fail
- The different types of transaction and how they are accounted for
- Consolidation accounting under the current IFRS 3 and IAS 27 and the new approach that will be taken by the revised IFRS 3, IAS 27 and IAS 28
- Change of control triggers
- Accounting for controlling interests (“NCI”)
- Accounting for disposals
- Partial disposals – creating a NCI
- Partial disposal – loss of control
- How much can an acquirer pay?
- Market-based analysis – comparable transactions and control premium
- Synergy analysis
- Generating an accretion/dilution analysis
- Using cash and the P/E of cash
- Accretion/dilution vs. wealth generation
- Financing and structuring the deal
Eureka Financial Faculty
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