Breakeven LBO Model-PC

In this model, we are building a 'Breakeven' case. Similar to the 'Downside' model, we are stressing management's assumptions to assess how our lend fares given a downturn in business performance. 

Unlike the 'Downside' model, we want to stress assumptions until our MOIC is flat at 1.0x. This is the point where we only receive the money we lent, no upside.

Within this model, we are not looking to rely on credit protection from structural features. We really just want to assess how our lend fares in correlation to the business's performance. The rationale is that if we are still comfortable lending after running the 'Breakeven' analysis, then any additional credit protection will just preserve upside. 

Goal: complete the template in under 45 minutes, model from a blank sheet in under 1 hour. Try to summarize in 3 sentences or less why this would or would not be a good investment purely based on the output of the model. 

Steps:

1. Download the prompt and use the attached template to assist your modeling 
2. Take a minute to look through the different sections of the model to understand where inputs may be flowing and where outputs are coming from (one base case sheet and one breakeven sheet)
3. Work the model top-down filling in the assumptions section, then the sources & uses, etc. You should only have to fill out the cells colored light gray 
4. After a first try, open up the answer file and really study the underlying formulas and the levers to impact returns
5. Attempt the template again. After completing the template with no assistance from the answer file, open up a blank excel and try to build a model from scratch to answer the prompt

The_Pulse_LBO_Model_Breakeven_Prompt PC.docx

The_Pulse_LBO_Breakeven_PC.xlsx

The_Pulse_LBO_Breakeven_Answer_PC.xlsx

📌Password: Buyside📌

Tip: You typically won't be provided assumptions to run a Breakeven analysis. You'll simply just be asked to find the Breakeven point. Follow the same guidance provided in our Downside model and stick to stressing core assumptions such as: the exit multiple, revenue growth, and the cost structure.