LBO Returns Analysis

Structure an LBO returns case in bear, base and bull scenarios, with MOIC and IRR sensitivity to entry, exit and leverage, plus a covenant headroom check on the downside.

⚠️ **Finance warning / Avertissement finance** : informational only, not investment advice. Scenario returns are arithmetic on assumptions, not forecasts: leverage amplifies the bear case as readily as the bull case, a downside scenario can breach covenants and wipe out equity, there is a real risk of loss in any buyout, and no IRR or MOIC here is a promise of return. Curated by Skill Harbor: the LBO returns analysis skill at the root of andreworia/claude-finance-skills. Distinct from the investment banking pack LBO modeling skill (lot 86), which builds the full model with its debt schedule and value creation bridge, and from the private equity pack LBO structuring skill (lot 89): this skill structures the returns logic, the scenario set and the sensitivity analysis that a live model must contain, ahead of an indicative bid, a final bid or an investment committee memo. The method builds sources and uses first, on quality of earnings adjusted EBITDA rather than management adjusted figures, then defines bear, base and bull cases that stay internally consistent across four operating dimensions (revenue growth, EBITDA margin, capex and working capital, each with its own downside mechanics such as churn driven revenue for subscription businesses or a margin floor for labour intensive ones). It then lays out the debt schedule per tranche with amortization, rate assumptions and prepayment terms, computes free cash flow after debt service per scenario, sets the exit with the base case held at the entry multiple (expansion labelled bull, compression labelled bear) across a standard five year hold with three and seven year sensitivity, and computes gross MOIC and IRR per scenario. Sensitivity is presented in prose across entry multiple, exit multiple and leverage at four, five and six turns, and the specific entry multiple at which the base case IRR falls below the fund target is flagged as the bid ceiling. The final section stress tests the bear case against the binding covenant, computes headroom year by year, flags anything under 15 to 20 percent as material breach risk, and runs an equity cushion check at the point of maximum stress, because negative implied equity in the bear case means default risk, not just return risk. The output is six sections of 900 to 1,300 words written to brief a CFO or chief investment officer. From the andreworia/claude-finance-skills repository (MIT). Honest caveats: the entry range, projections, capital structure terms and fund hurdle are yours to supply and to verify; the skill defines what the model must contain, it does not replace the live spreadsheet. Skill Harbor never reviews the code, review it yourself before use.

At a glance

What: Structure an LBO returns case in bear, base and bull scenarios, with MOIC and IRR sensitivity to entry, exit and leverage, plus a covenant headroom check on the downside.
Cost: Free
Needs: Use "LBO Returns Analysis" with your Muse.
Install: Copy the installer prompt below into your Muse — your agent does the rest.

⚠️ **Finance warning / Avertissement finance** : informational only, not investment advice. Scenario returns are arithmetic on assumptions, not forecasts: leverage amplifies the bear case as readily as the bull case, a downside scenario can breach covenants and wipe out equity, there is a real risk of loss in any buyout, and no IRR or MOIC here is a promise of return. Curated by Skill Harbor: the LBO returns analysis skill at the root of andreworia/claude-finance-skills. Distinct from the investment banking pack LBO modeling skill (lot 86), which builds the full model with its debt schedule and value creation bridge, and from the private equity pack LBO structuring skill (lot 89): this skill structures the returns logic, the scenario set and the sensitivity analysis that a live model must contain, ahead of an indicative bid, a final bid or an investment committee memo. The method builds sources and uses first, on quality of earnings adjusted EBITDA rather than management adjusted figures, then defines bear, base and bull cases that stay internally consistent across four operating dimensions (revenue growth, EBITDA margin, capex and working capital, each with its own downside mechanics such as churn driven revenue for subscription businesses or a margin floor for labour intensive ones). It then lays out the debt schedule per tranche with amortization, rate assumptions and prepayment terms, computes free cash flow after debt service per scenario, sets the exit with the base case held at the entry multiple (expansion labelled bull, compression labelled bear) across a standard five year hold with three and seven year sensitivity, and computes gross MOIC and IRR per scenario. Sensitivity is presented in prose across entry multiple, exit multiple and leverage at four, five and six turns, and the specific entry multiple at which the base case IRR falls below the fund target is flagged as the bid ceiling. The final section stress tests the bear case against the binding covenant, computes headroom year by year, flags anything under 15 to 20 percent as material breach risk, and runs an equity cushion check at the point of maximum stress, because negative implied equity in the bear case means default risk, not just return risk. The output is six sections of 900 to 1,300 words written to brief a CFO or chief investment officer. From the andreworia/claude-finance-skills repository (MIT). Honest caveats: the entry range, projections, capital structure terms and fund hurdle are yours to supply and to verify; the skill defines what the model must contain, it does not replace the live spreadsheet. Skill Harbor never reviews the code, review it yourself before use.

Version:

a

Created by: andreworia

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Install — Free · open source (MIT) View source code

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Install

Copy the install package below, then paste it into Muse

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Use "LBO Returns Analysis" with your Muse. Prerequisites: the entry multiple range, quality of earnings adjusted LTM EBITDA, three to five year management projections, the proposed capital structure with debt terms if a financing bank has provided them, the fund target IRR and hold period, and your exit multiple range. A spreadsheet tool is where the live model will live: this skill produces the returns logic, scenarios and sensitivities in prose, and every assumption in them is yours to verify. No account and no credentials are involved. Informational only, not investment advice. 1. Open the skill: https://github.com/andreworia/claude-finance-skills/blob/main/skills/lbo-returns-analysis/SKILL.md and copy the full SKILL.md text. 2. Paste it into a chat with Muse and add: "Build the LBO returns analysis: lay out sources and uses on quality of earnings adjusted EBITDA, define internally consistent bear, base and bull cases across growth, margin, capex and working capital, build the debt schedule and free cash flow after debt service, set the exit with the base case flat to entry, compute MOIC and IRR per scenario with entry, exit and leverage sensitivities, flag the bid ceiling, and run the bear case covenant headroom and equity cushion checks." 3. Read the covenant section before the returns table: a base case that clears the hurdle while the bear case breaches in year one is a structure problem, not a pricing problem. Tip: keep the three scenarios honest and symmetric; a bear case that is only mildly softer than base hides exactly the downside this skill exists to expose. Safety: a skill is plain-text instructions; it runs nothing by itself. Analysis and documents only, no orders and no account access. Informational only, not investment advice.

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