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:
The_Pulse_LBO_Model_Dividend_Recap_Prompt.docx
The_Pulse_LBO_Model_Dividend_Recap.xlsx
The_Pulse_LBO_Model_Dividend_Recap_Answer.xlsx
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Tip: A dividend recap is new debt to pay out the sponsor. Model it exactly as it sounds.