LBO Modeling

⚠️ **Finance warning / Avertissement finance** : informational only, not investment advice. An LBO model tests whether a buyout clears a return hurdle on paper; leverage magnifies losses as readily as gains, real deals can and do lose money, and no return figure here is a promise of return. Curated by Skill Harbor: the leveraged buyout skill of the investment banking pack in andreworia/claude-finance-skills. Use it when the question is what a financial buyer can pay and still hit its hurdle: assessing a sponsor price, setting a floor in a valuation range, or stress-testing leverage and returns. The method runs in eight steps. It sets the entry (entry enterprise value as a multiple of LTM EBITDA, transaction date, hold period, commonly five years), builds sources and uses that must tie (uses: purchase equity value, refinanced debt, fees; sources: debt tranches sized to a leverage target in turns of EBITDA, sponsor equity as the plug), projects the operating case down to free cash flow available for debt paydown, builds a debt schedule per tranche with mandatory amortization, cash interest and an optional cash sweep of excess cash applied in priority order, resolves the interest circularity explicitly (iterative calculation or a circuit-breaker toggle), sets the exit (exit multiple applied to exit-year EBITDA, with the base case held flat because assuming expansion is aggressive), computes both IRR and MOIC since a high multiple on a long hold can still miss the IRR hurdle, and decomposes the equity gain into a value-creation bridge: EBITDA growth, multiple change, and debt paydown, with sensitivities on entry multiple, leverage and exit multiple. The worked example in the file is fictional and illustrative. From the andreworia/claude-finance-skills repository (MIT). Honest caveats: the skill produces a model structure and prose output, not a spreadsheet, and the operating forecast, debt terms and exit assumption are yours to supply and to check; a model that clears the hurdle does not make a real buyout safe. Skill Harbor never reviews the code, review it yourself before use.