LBO Model


profile Benjamin Bryer, CFA, Recovering fixed income analyst; SMB investor; finance nerd
This model was created for a single-sponsor search fund to evaluate the feasibility and financial attractiveness of a two-part transaction involving a small business buyout (asset purchase) and commercial real estate purchase. As part of the deal, an operating company ("OpCo" or "NewCo") was created to acquire the assets of OldCo and a property company ("PropCo") was created to purchase the commercial real estate. OpCo and PropCo are the exclusive subsidiaries of a newly-formed holding company ("HoldCo"). The LBO model is modelled at the HoldCo level since the bank set the debt covenants at the holding company level. The model includes multiple pro forma operating and financing scenarios, allowing the user to fully evaluate the risk-reward profile of the deal across a full range of scenarios.


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