LFCF for the purpose of LBO, walk from NI to Ending Cash
7. Open Ended
30 seconds
1 pt
D/E to Debt/Capital
8. Open Ended
30 seconds
1 pt
*Bank Debt 1/2*
Types
Terms
% of Avg. LBO Capital
x EBITDA
Interest Rate (LIBOR + and total)
Cash vs PIK?
9. Open Ended
30 seconds
1 pt
*Bank Debt 2/2*
Amortisation?
TLA vs TLB
Early repayment?
Covenants?
10. Open Ended
30 seconds
1 pt
*Subordinated Debt*
Note on senior notes
% of Cap Structure
xEBITDA
Interest
Amortisation
Term
Who issues it?
Types?
Is it secured?
Covenants
Prepayment?
11. Open Ended
30 seconds
1 pt
*Mezzanine*
% of Cap Structure
Interest
Term
Secured?
Covenants?
Other features
12. Open Ended
30 seconds
1 pt
*Equity* - most common % of total cap structure
13. Open Ended
30 seconds
1 pt
Would you rather receive a higher IRR or MOIC?
IRR: reasons for (x2)
14. Open Ended
30 seconds
1 pt
Would you rather receive a higher IRR or MOIC?
MOIC: reasons for (x2)
15. Open Ended
30 seconds
1 pt
Valuation methodologies, highest to lowest values
16. Open Ended
30 seconds
1 pt
Walk me through an LBO (high-level)
17. Open Ended
30 seconds
1 pt
How would you determine exit multiple?
18. Open Ended
30 seconds
1 pt
How would you estimate how much debt capacity is available?
- three primary ratios
19. Open Ended
30 seconds
1 pt
What makes a good target? 7 points and discussion
20. Open Ended
30 seconds
1 pt
Stages of Deal Process Funnel (per year)
21. Open Ended
30 seconds
1 pt
Common Diligence Topics: CDD (x4)
22. Open Ended
30 seconds
1 pt
Common DD Topics: Valuation
23. Open Ended
30 seconds
1 pt
Common DD Topics: Accounting
24. Open Ended
30 seconds
1 pt
Common DD topics: legal
25. Open Ended
30 seconds
1 pt
Preferred exit routes in order (3)
26. Open Ended
30 seconds
1 pt
Why would dividends as an exit strategy be bad?
27. Open Ended
30 seconds
1 pt
Case study: prompt says "£200m of debt debt", £75m of existing cash. Equity Value is 600 (based on premium to market cap). What goes in S&U?