Dividend Recap LBO Model-PE

A dividend recap is one of the most popular scenarios you will be asked to model. It is also very topical since this is one of the only liquidation strategies PE firms have been able to pursue to return capital to LPs in an elevated rate environment with moderately depressed multiples.   

Remember, really try to figure things out on your own before 'cheating' with the answer sheet. Think about what a dividend recapitalization is before diving headfirst. What part of the capital structure is being impacted? 

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 (new section featured)
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_Dividend_Recap_Prompt.docx

The_Pulse_LBO_Model_Dividend_Recap.xlsx

The_Pulse_LBO_Model_Dividend_Recap_Answer.xlsx

📌Password: Buyside📌

Tip: A dividend recap is new debt to pay out the sponsor. Model it exactly as it sounds.