Out Of This World Lbo Pro Forma Balance Sheet

Now that weve begun to build our income statement lets switch gears and set up our balance sheet.

Lbo pro forma balance sheet. It is much easier to think about all of these changes in three categories. A leveraged buyout LBO model is constructed in the event of a an acquisition funded with a significant amount of debt to evaluate the transaction. The 3-statement model is basically the historical income statement the balance sheet and the cash flow statement stacked one on top of the other.

The historical cash flow statement can also be derived from the income statement and the balance sheet. Lets make some assumptions about the fees the target will pay to complete the LBO transaction. Balance Sheet Set-Up STEP 6.

In an LBO transaction an investment banker or private equity investor is required to build a Sources Uses table that lays out the pro forma adjustments that are made to the balance sheet of the underlying LBO target company. Everything about the process of building a Simple LBO is fairly straightforward with the exception of the balance sheet adjustments. Pro Forma Balance Sheet This content is for Basic Plus Pro Double Pro Combo Package Double Plus Combo Package and 3 Statement DCF Plus LBO Pro Combo Package members only.

The 4th step in LBO is to build the historical 3-statement model and debt-interest schedule. Im building an LBO model and the business started with 2mm of cash. Pro Forma Balance Sheet STEP 18 Incremental Depreciation Amortization Working Capital Assumptions Now that we have completed the purchase price allocation and specified our financing arrangements we can enter all the adjustments needed to go from the LTM balance sheet to the pro forma balance sheet at closing.

For now we are going to simply plug in historical balance sheet data and leave room for transaction adjustments that will help us calculate the targets pro forma balance sheet at the close of. Typically there is an advisory fee measured as a percentage of the transaction size a financing fee associated with each tranche of debt calculated as a percentage of principal and miscellaneous expenses of a fixed nature such as legal and accounting fees. We then sum each line item horizontally to arrive at the pro forma balance sheet for the combined business.

Ive already created my purchase accounting entry funding entries transaction expenses and deferred financing fees. Be sure to verify that total assets equal total liabilities plus stockholders equity. Please Login to view this content or Sign Up Here.