An illustrative example of a paper LBO is provided below in 5 simple steps. In a paper LBO exercise, you will be expected to complete the important components of a working LBO model with the use of paper and pencil and without the use of a computer. Using a 5. The given information assumes debt to equity ratio of for the purchase price. Also note that the numbers might not agree perfectly because of rounding. It is reasonable to round your intermediate calculations to the nearest integer in carrying over calculations to the next step.
This post is step two in our solution to the very first real estate investment case study challenge. This case is exemplary of a one-hour, on-site, asset-level real estate private equity interview case study. We strongly recommend you first try building this entire real estate LBO model before following the solution. Finally, you can download the full solution Excel file here.
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Do sponsors buy the whole company? In LBOs, the sponsor generally buys a controlling stake in the company. Why does a sponsor use debt?