Quick Lesson: Simple LBO Model

March 18th, 2013| Written By Matan Feldman| 6 Comments Return to Posts

In this video tutorial, we’ll build a leveraged buyout (LBO) model, given some operating and valuation assumptions, in Excel. The goal of this video is to show you that an LBO model is actually a very simple transaction at its core – and quite similar to the mechanics involved when purchasing a home. If after watching this video you want to take your LBO modeling to the next level, see Wall Street Prep’s advanced LBO modeling course.
Note: To download the Excel template that goes with this video, click here

Building a Simple LBO Model  – Video 1 of 3

Building a Simple LBO Model  – Video 2 of 3

Building a Simple LBO Model  – Video 3 of 3

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Written by Matan Feldman


Matan Feldman is Wall Street Prep’s Founder and Managing Partner. His responsibilities include business development, development of courses, and overseeing training programs. Matan has overseen training programs for clients including Morgan Stanley, Credit Suisse, Raymond James, Stifel Nicolaus, FBR Capital Markets, Sagent Advisors, Giuliani Capital Advisors, JP Morgan, Cerberus, Wharton Business School, London Business School, Kellogg, Booth, Stern (NYU), and Cornell. Prior to founding Wall Street Prep, Matan served in several capacities on Wall Street — first as an Analyst in Chase Manhattan Bank's Mergers & Acquisitions Group in New York, and subsequently as an Associate within JP Morgan's Equity Research Group, covering Food & Drug Retail Equities.

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6 Responses

  1. January 4, 2015


    After Video 2, where do we see the deduction in cash/FCF after the REQUIRED debt pay down? I say this for the formula in cash (row 41) – why isn’t cash deducted another 1,000? Where is the 1,000 required pay down coming from? Thanks!

    • January 13, 2015

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      Haseeb Chowdhry

      The 1,000 deducted per year is our assumption as stated in the beginning part of video 2. The formula in row 41 depends on the formula in row 50 which calculates the options repayment in the year AFTER the 1000 has been paid mandatorily. The deduction in cash/FCF after the required debt paydown is implicit – it’s captured in the line item in line 38 – free cash flow available after required debt paydown of 1,000 – which again is our assumption.

  2. March 26, 2015


    When I calculate the exit multiple of 6.5x times the EBITDA in 2016 of 3,513.8, I get 22,840, not 22,696 as you show in this video. What did I do incorrectly?

    • March 26, 2015

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      Haseeb Chowdhry


      Check if you calculated your revenues / EBITDA correctly – ensure they match up to the completed tab. Let me know if you’ve resolved this – thanks.


  3. May 30, 2015

    Dennis Limbo


    Does this LBO works for everyone?

    • June 1, 2015

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      Haseeb Chowdhry


      As with any LBO – you will have to make company-by-company adjustments, but overall it is a solid start.