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M&A Blog #19 – valuation (Leveraged Buy Out - LBO)

Francine Way

The major steps of LBO are: Building the Sources and Uses tables. Building a proforma balance sheet. Building a historical 3-statement model and a debt-interest schedule. Building the go-forward 3-statement model. Building the go-forward debt-interest schedule. Modeling the future exit.

Valuation 130
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M&A Blog #17 – valuation (Comparable Company)

Francine Way

Building the proforma income statement, proforma balance sheet, and Free Cash Flow to Firm (FCFF). Calculating cost of debt, cost of equity, and weighted average cost of capital (WACC). The multiples calculation then proceeded as follow: Market Capitalization = Share Price * Fully-diluted Shares Outstanding.

Valuation 130
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M&A Blog #16 – valuation (Discounted Cash Flow)

Francine Way

Build proforma income statement and balance sheet. Calculate cost of debt, cost of equity, and weighted average cost of capital (WACC). For interest income and expense, I prefer to state them as percentages of the average debt balance of the last two years. Derive Free Cash Flow to Firm (FCFF).

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Exit Planning Through an Investment Banker’s Lens

Focus Investment Banking

Optimize Working Capital (One Year Ahead) What It Is: Net Working Capital (NWC) is Current assets minus current liabilities (A/R + Inventory A/P + Accrued Expenses), excluding cash, which you keep (in a typical cash-free, debt-free transaction). Consistently book expenses to the appropriate line item.

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Guiding Entrepreneurs: David Barnett's Comprehensive Approach to Buying and Selling Businesses

How2Exit

Barnett is also an accomplished author with multiple books on topics related to investing in local businesses, franchising, and buy-sell strategies, with his latest book set to release in the fall. rn Key Takeaways: rn rn rn Typical leverage for large public companies is between 50-60% debt; anything higher is considered risky.

Business 130
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12 Concepts We Can Learn About Buying VS. Building a Business on How2Exit's Interview W/ Walker Deibel

How2Exit

Walker Diebold, bestselling author of “Buy Then Build: How to Acquisitions Entrepreneurs Outsmart the Startup Game,” experienced the stock market firsthand as a stockbroker and learned valuable lessons from his experiences. In 2018, Walker released his book “By Then Build” which was inspired by this idea.

Business 130
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7 Things I Learned from Lana Coronado - Author and Chair for MBH who have acquired 25 companies in less than 2 years.

How2Exit

Lana also co-authored a book about investing in real businesses. The book covers the steps that can be taken to make a business worth buying, such as understanding the market, preparing for the sale, and understanding the legal aspects of the transaction. Concept 3: Network to build relationships.