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Leveraged Buyouts: A Practical Guide to Investment Banking and Private Equity, + Website by Paul Pignataro

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APPENDIX 1

Model Quick Steps

For a full-scale leveraged buyout model, after completing core assumptions (purchase price, sources, and uses), the next steps should serve as a guide for modeling the rest of the model:

I. Income Statement
1. Input historical income statement data.
2. Project revenue.
3. Project all expenses.
a. Leave “Depreciation” empty (to come from depreciation schedule, IV.1.a).
b. Leave “Interest Expense” and “Interest Income” empty (to come from debt schedule, VII.8 and VII.9).
4. Build to Net Income.
II. Cash Flow
1. Input historical cash flow data.
2. Cash Flow from Operations projections.
a. Pull in “Net Income before Distributions” from income statement.
b. Leave “Depreciation” empty (to come from depreciation schedule, IV.1.b).
c. Leave “Changes in Operating Working Capital” empty (to come from operating working capital schedule, V.1.a and V.2.a).
d. Project “other” items.
3. Cash flow from investing.
a. Project CAPEX.
b. Project “other” items.
4. Cash flow from financing.
a. Leave “Short-Term Borrowings (Repayments)” empty (to come from debt schedule, VII.10).
b. Leave “Long-Term Borrowings (Repayments)” empty (to come from debt schedule, VII.11).
c. Pull in “Dividends” from income statement.
d. Project “other” items.
5. Sum Total Cash Flow.
III. Balance Sheet Adjustments
1. Input historical balance sheet data.
2. Perform balance sheet adjustments.
IV. Depreciation Schedule
1. Project depreciation.
a. Depreciation links to income statement (I.3.a). ...

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