Earnout Scenario LBO Model-PE

This is an adaptation of the intermediate model. In most cases, you'll basically be asked to build a full 3-statement LBO from scratch and incorporate a few scenarios. Think about this as one of the scenarios you may be asked to incorporate.  

Remember, really try to figure things out on your own before 'cheating' with the answer sheet. For scenarios, I like to practically think about what the scenario is trying to achieve before just blindly banging away in excel. So, if this is an earnout scenario--really think about what an earnout is, who benefits, and how that might be modeled. 

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 
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_Earnout_Prompt.docx

The_Pulse_LBO_Model_Earnout_Scenario.xlsx

The_Pulse_LBO_Model_Earnout_Scenario_Answer.xlsx

📌Password: Buyside📌

Tip: an earnout is an equity mechanism (it is really just a concern when modeling returns)