LBO Model

An LBO (Leveraged Buyout) model is a financial analysis used to evaluate the purchase of a company primarily using borrowed money (debt). In an LBO, investors buy a business with a combination of their own equity and significant debt, aiming to improve its operations and sell it later for a profit. The model projects how the company will perform, how quickly debt can be repaid, and whether the investment will generate acceptable returns. It helps investors assess the risks and potential rewards of acquiring and improving a company using leverage.