Advanced LBO Modeling

A more thorough treatment of the LBO course covered in the Premium Package. Designed for investment banking and PE professionals who want to take their LBO modeling skills to the next level.

Advanced LBO Modeling

Course Description

Leveraged buyout (LBO) modeling is used widely by investment banks and private equity firms and is often part of a finance interview. In this course by Wall Street Prep, you will learn how to build a real, complex LBO model from scratch. You will start by learning about basic LBO concepts, typical deal structures, and current industry dynamics. You will then build a full LBO model from scratch with stock vs asset sale toggles, multiple tranches of debt, PIK toggles, and sophisticated deferred tax and depreciation schedules. The course concludes with advanced topics such as purchase price allocation and deferred taxes in acquisitions. At completion, trainees will have developed a a comprehensive LBO model and gained the confidence to ace the finance interview.

Course Details:


Those who enroll should have an introductory knowledge of accounting (e.g. interaction of balance sheet, cash flow, and income statement) and proficiency in Excel. Students with no prior background in Accounting should enroll in the Accounting Crash Course. Students with limited experience using Excel should enroll in the Excel Crash Course.
Certificate Info:

Type of Certification

Certificate of Completion

Format of Certification


Course Outline

  • Understanding concepts: Working through an LBO on a cocktail napkin
  • What is the current financing and valuation environment?
  • What are key industry benchmarks?
  • LBO capital structure: TLs, Bonds, Mezz, Preferred, Bridge Loans and Equity
  • How PE funds work and where they fit in the financial system
  • GP vs LP dynamics
  • PE Economics: The distribution waterfall
  • Setting up the initial valuation and general assumptions
  • Calculating diluted shares
  • Building the Sources & Uses schedule: Build a heavy duty, yet flexible, sources & uses of funds schedule; Make adjustments in one place – watch it flow error-free throughout entire model.
  • Line-by-line build-up and forecasting of the income statement and working capital schedules
  • Modeling LBO debt
  • Term loan A/B/C– Modeling mandatory amortization as well as cash sweeps
  • Revolver – Automatic cash sweep, minimum cash balance, and maximum borrowing capacity
  • Pricing matrix driven off LIBOR spot rates + spread
  • Senior and Sub Notes – Modeling PIK vs Cash interest
  • Preferred stock – Allowing for equity kickers
  • LBO returns and exit analysis for all providers of capital:
  • Sponsor equity and management rollover
  • Lenders and preferreds
  • LBO modeling best practices
  • Circularity breaker and error trapping – no more DIV#0 and REF#!
  • Building key sensitivities into model outputs
  • Building PIK toggles into debt tranches
  • Layering a Pro Forma 3 Statement Model on the LBO Analysis
  • Key balance sheet adjustments in an LBO
  • Advanced Purchase Price Allocation (PPA) modeling (Goodwill; Asset write-ups; Deferred taxes created in the deal)
  • Toggling between LBO and recapitalization accounting treatment
  • Creating a switch for Asset sale/338 vs Stock Sale tax treatment
  • Modeling dividend recaps
  • Attaching a DCF analysis to an LBO model


We can send you everything you need to know about this course through email.
We respect your privacy. Your information is safe and will never be shared.