Leveraged Buyouts + Website A Practical Guide to Investment Banking and Private Equity

by Pignataro, Paul

• ISBN13: 9781118674543
• ISBN10: 1118674545
• Edition: 1st
• Format: Hardcover
• Copyright: 2013-12-23
• Publisher: Wiley

Summary

A comprehensive look at the world of leveraged buyouts

The private equity industry has grown dramatically over the past twenty years. Such investing requires a strong technical know-how in order to turn private investments into successful enterprises. That is why Paul Pignataro has created Leveraged Buyouts + Website: A Practical Guide to Investment Banking and Private Equity.

Engaging and informative, this book skillfully shows how to identify a private company, takes you through the analysis behind bringing such an investment to profitability—and further create high returns for the private equity funds. It includes an informative leveraged buyout overview, touching on everything from LBO modeling, accounting, and value creation theory to leveraged buyout concepts and mechanics.

• Provides an in-depth analysis of how to identify a private company, bring such an investment to profitability, and create high returns for the private equity funds
• Includes an informative LBO model and case study as well as private company valuation
• Written by Paul Pignataro, founder and CEO of the New York School of Finance

If you're looking for the best way to hone your skills in this field, look no further than this book.

Author Biography

PAUL PIGNATARO is the founder and CEO of the New York School of Finance (NYSF). He has over thirteen years of experience in investment banking and private equity in business mergers, acquisitions, restructurings, asset divestitures, asset acquisitions, and debt and equity transactions covering the oil, gas, power and utility, Internet and technology, real estate, defense, travel, banking, and service industries. Mr. Pignataro continues to participate on the training team, actively providing training at bulge bracket banks and M&A teams at corporations, and billion-dollar funds. Prior to his entrepreneurial endeavors, Mr. Pignataro worked at TH Lee Putnam Ventures, a $1 billion private equity firm affiliated with buyout giant Thomas H. Lee Partners. Prior to TH Lee, Mr. Pignataro worked in the investment banking department of Morgan Stanley.

Table of Contents

Preface

The Heinz Case Study

How This Book is Structured

Part I: Leveraged Buyout Overview

Chapter 1:  Leveraged Buyout Theory

Cash Availability, Interest, and Debt Pay Down

Operation Improvements

What Is a Good Leveraged Buyout?

Is Heinz a Leveraged Buyout?

Chapter 2: What is Value?

Book Value

Market Value

Enterprise Value

Multiples

Three Core Methods of Valuation

Chapter 3:  Leveraged Buyout Analysis

Purchase Price

Sources and Uses of Funds

IRR Analysis

Part II: Leveraged Buyout Full Scale Model

Chapter 4:  Assumptions

Chapter 5:  The Income Statement

Revenue

Cost of Goods Sold

Operating Expenses

Other Income

Depreciation and Amortization

Interest

Taxes

Non-Recurring and Extraordinary Items

Distributions

Shares

Heinz Income Statement

Last Twelve Months (LTM)

Income Statement – Making Projections

Chapter 6: Cash Flow Statement

Cash from Operating Activities

Cash from Investing Activities

Cash from Financing Activities

Heinz Cash Flow Statement

Heinz Cash Flow Last Twelve Months (LTM)

Cash Flow Statement – Making Projections

Chapter 7: The Balance Sheet

Assets

Liabilities

Heinz’s Balance Sheet

Chapter 8: Balance Sheet Adjustments

Heinz Balance Sheet Adjustments

Chapter 9: Depreciation Schedule

Straight Line Depreciation

Accelerated Depreciation

Deferred Taxes

Projecting Depreciation

Amortization

Deferred Taxes

Chapter 10: Working Capital

Asset

Current Asset

Liability

Operating Working Capital

Heinz’s Operating Working Capital

Projecting Operating Working Capital

Operating Working Capital and the Cash Flow Statement

Chapter 11: Balance Sheet Projections

Balancing an Unbalanced Balance Sheet

Chapter 12: Debt Schedule and Circular References

Debt Schedule Structure

Modeling the Debt Schedule

Circular References

Automatic Debt Paydowns

Basic Switches

Finalizing the Model

Chapter 13: Leveraged Buyout Returns

Exit Multiples

Returns to 3G

EBITDA Improvements

Conclusion

Part III: Advanced LBOs

Chapter 14: Accelerated Depreciation

MACRS

Accelerated vs. Straight Line Depreciation

Chapter 15: Preferred Securities, Dividends, and Returns to Berkshire Hathaway

Preferred Securities

Preferred Dividends

Returns to Berkshire Hathaway

Chapter 16: Debt Covenant Ratios, and Debt Fee Amortization

Coverage Ratios

Leverage Ratios

Debt Fee Capitalization and Amortization

Chapter 17: Paid in Kind Securities

Chapter 18: Closing Adjustments

Appendices

Appendix 1: Model Quick Steps

Appendix 2 – Financial Statement Flows

Appendix 3 – Excel Hotkeys

About the Companion Website

About the Author

Index