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.

Welcome to Advanced LBO Modeling

Introduce the advanced part of the LBO modeling course

Level 5 LBO

The full LBO, RobCo without a detailed balance sheet build

Level 5B LBO - Earnout

The full LBO, RobCo without a detailed balance sheet build

Level 5B LBO - PIK Interest

We build on the RobCo model to incorporate PIK interest, MIPs, and Earnout structures

Level 5B LBO - Mgmt Options

We build on the RobCo model to incorporate PIK interest, MIPs, and Earnout structures

Level 5B LBO Recap & Returns Bridge

We build on the RobCo model to incorporate PIK interest, MIPs, and Earnout structures

Level 6 LBO

We introduce and model a dividend recapitalization

Level 6 LBO - Alternative Returns (Dynamic Exit)

The dividend recap model showing a dynamic exit year for returns

Intro to Purchase Price Allocation

Modeling the pro forma balance sheet requires adjustments to reflect the new deal structure

Overview of Deferred Taxes

Temporary differences between GAAP and IRS taxes give rise to deferred taxes

Discussion of Goodwill

Often the largest asset in connection with a deal, goodwill represents the premium the buyer is paying for an asset

Level 7 LBO

Here is the full LBO model integrated with a 3 statement model. We introduce purchase price allocation and give a comprehensive tutorial of the LBO model.

Intro to M&A

The buy-and-build strategy allows the investor to acquire additional smaller businesses, called tuck-ins or add-ons, to build an even larger platform

Level 8 LBO (Mostly Review of Level 7)

Here is the LBO with M&A functionality. We dive into how add-ons can create value and discuss merger complexities along with synergies.

Level 8 LBO Part 2 - M&A

The nuances related to funding a deal with debt vs. equity, and updating the pro forma financial statements for the TargetCo

Summary of Investment Structures

Discussion of convertible preferred, participating preferred, preferred stock, and convertible debt/SAFE notes

Level 9 LBO - Convertible Preferred

An LBO model with a convertible preferred structure

Level 10 LBO - Participating Preferred

An LBO model with a participating preferred structure

Wrap Up & Next Steps

Course conclusion & how to continue on the learning curve