LBO Models

An LBO (Leveraged Buyout) model is a way to analyze how a company can be acquired using mostly borrowed money. In this process, a buyer (like a private equity firm) uses a smaller amount of their own funds and borrows the rest, often secured against the company's assets. The model assesses if, after making operational improvements and paying down debt over time, the buyer can sell the company for a profit. It helps determine if the deal is financially viable by estimating returns and understanding how debt influences risk and potential rewards.