Master LBO Modeling
From Foundation to Advanced

Welcome & Introduction

Course overview, what you'll learn, and how to get the most out of the LBO Modeling Masterclass.

Private Equity Overview

What private equity is, how PE firms operate, and the role of leverage in generating returns.

Asset Classes

Where private equity fits within the broader landscape of asset classes and alternative investments.

Private Equity Fund Structure

How PE funds are structured — GPs, LPs, fund lifecycle, capital calls, and distributions.

PE Fund Math Example

A worked example using Rob Capital Partners to illustrate fund economics, management fees, carry, and LP returns.

European vs. American Style PE Waterfall

The key differences between European (deal-by-deal) and American (whole fund) waterfall structures.

Day in the Life as PE Investor

What a typical day looks like for a PE professional — deal sourcing, due diligence, portfolio monitoring, and more.

Recruiting for Private Equity

How to break into private equity — the recruiting timeline, what firms look for, and how to prepare.

Welcome & Directions for LBO Modeling

How this chapter is structured and how to follow along with the Excel models.

LBO Fundamentals

The core mechanics of a leveraged buyout — what makes an LBO work and why PE firms use them.

Quick LBO Example

A simplified walkthrough of an LBO from start to finish to build intuition before diving into models.

Ideal LBO Characteristics

What makes a company a good LBO candidate — stable cash flows, asset base, margin profile, and growth.

The 5 Step Process

The structured 5-step framework used to build every LBO model in this course.

Step 1: LBO Assumptions

Setting up the key assumptions that drive an LBO model — purchase price, leverage, and operating projections.

Step 2: Sources & Uses

Building the sources & uses table — equity contribution, debt tranches, and transaction fees.

Enterprise Value vs. Equity Value

The critical distinction between enterprise value and equity value, and how it applies to LBO transactions.

Intro to Case Study

Introduction to the case studies used throughout this chapter — context and setup for hands-on modeling.

Level 1 LBO

Simple Dell case study to understand LBO fundamentals and drivers of returns.

LBO Return: Need to Believe

Understanding what return assumptions you need to believe for an LBO to work — the investor's perspective.

OldCo vs. NewCo

The distinction between the pre-acquisition company (OldCo) and the post-LBO entity (NewCo).

Excess Cash Explanation

How excess cash flow is generated in an LBO and its role in debt paydown and return enhancement.

Drivers of Return

The three levers that drive LBO returns — leverage paydown, EBITDA growth, and multiple expansion.

Exit Strategies

How PE firms exit investments — strategic sale, IPO, secondary buyout, and dividend recapitalizations.

LBO Theory & Intuition

Building the intuition behind LBO mechanics — why certain deals work and others don't.

Level 2 LBO

Extend the Dell case study to incorporate management rollover into the LBO structure.

Management Rollover

How management equity rollover works in LBOs — alignment of interests, dilution, and structuring.

Step 3: Financial Forecast

Building the projected income statement and operating assumptions for the LBO model.

Step 4: Debt & Interest Schedules

Constructing the debt schedule — mandatory amortization, interest expense, and cash sweep mechanics.

Level 3 LBO

Introduce financial modeling and debt paydown schedule to build foundational LBO skills.

LBO as a Valuation Tool: Ability to Pay

Using the LBO framework as a valuation methodology — determining the maximum price a PE firm can pay.

A Primer on Debt

A comprehensive overview of debt instruments used in LBOs — senior, subordinated, mezzanine, and high-yield.

Step 5: Calculate Returns

The final step — calculating IRR, MOIC, and cash-on-cash returns at various exit scenarios.

Level 4 LBO

A more advanced LBO model incorporating multiple debt tranches and a complete returns analysis.