如何建立LBO模型(2)

maexhibits\\models\\lbo_short_htg.doc kekiehl 4 Apr 2013 5:43 /10

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LBO Short Form Model How To Guide

Key Drivers & Assumptions Page Item

Source / Issues to Consider

All Items Sources: Public vs. Management Issue:

— Every input can be gathered from either public sources or management. The

following descriptions will list only the public sources unless specifying management as a source helps to clarify a point.

Purchase Price Driver

Issue: The purchase price driver gives the model the flexibility to run the price off of a price per share or, for private targets with no share information, enterprise value. If “V” (enterprise value) is selected as a driver, the model will not utilize the options inputs. Total equity purchased will be calculated as enterprise value less net debt. Note that the “Total Purchase Price” line item in the summary will be greater than enterprise value because it only adds in the debt assumed, it does not back out cash.

LIBOR Rate Source: Web — IBD Home Page: Money Market Rates

Issue: Typically the bank market will look at 90 day LIBOR. Bank debt is priced at a spread to LIBOR. For the purposes of this model, the LIBOR Rate input is just used in a footnote since the capital structure has you just input a rate for the bank debt.

10-year US Treasury rate Source: Web — IBD Home Page: Money Market Rates

Issue: Bond prices are usually set as a spread to the 10-year US Treasury rate. The model actually has you put in a rate for the bonds in the capital structure and the 10-year rate is just used in a footnote. It is also used in the “Warning” section — if the rate you have set on the PIK debt is greater than the 10-year plus 5.00%, a warning will flag that some of the interest may not be tax deductible.

Basic shares outstanding

Source: Latest 10-Q or 10-K

Options Outstanding and Weighted Avg. Strike Price

Source: Latest 10-K

Issues: Using a single options outstanding number and a weighted average strike price (“WASP”) is a simplification. If the company has a significant amount of options and the contemplated deal prices are close to the WASP, this simplification could result in a material error. Consider building a more detailed options schedule that lays out the

various option issues and strike prices and can be used to determine which options are “in the money” as the deal price changes.

Options Treatment: General

Defaults: — Liquidation

— Tax-deductibility: The conservative default assumption is that 0% of the options

are tax-deductible. In fact, options are most often “Non-Qualified” or “NQSO’s” and therefore tax-deductible to the employer. They are called “Non-Qualified” because they are taxable to the employee. The other type of option is an “Incentive Stock Option” or “ISO.” ISO’s are not taxable to employees as ordinary income and are therefore not tax-deductible to employers as

maexhibits\\models\\lbo_short_htg.doc kekiehl 4 Apr 2013 5:43 /10

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LBO Short Form Model How To Guide

compensation income. The model allows you the flexibility to assume some percentage of the consideration paid for the options will be tax-deductible.

Issues:

— No rules: There are really no rules when it comes to the treatment of the target’s

options in a transaction. The default settings are chosen to match the most typical treatments and to make the calculations involving options the easiest to hand check.

Options Treatment: Roll-over

— Roll-over: The target’s options remain outstanding (or are translated into options of

the new entity post-transaction with no loss of intrinsic value).

— Sources and Uses: The model will show the value attributable to the options as

a use of funds. However, since no cash will actually be paid to the option holders, the value attributable to the options will also show up as a source of

funds so that there is no net use of cash. The model uses “Intrinsic Value” as the value of the options, i.e., the difference between the purchase price per share and the weighted average strike price multiplied by the number of options. — Tax-deductibility: If you have some % of the options be tax-deductible, the

model will net tax savings against the consideration of the options. Although the rollover itself does not generate any immediate cash tax savings, these savings are imbedded in the options when they are exercised, so from a theoretical standpoint they are imbedded in the consideration paid for the options

Options Treatment: Liquidation

— Liquidation: The target’s options are liquidated for cash. The model assumes the

options are liquidated for their Intrinsic Value.

— Tax-deductibility: This default is solely to be conservative. Under U.S. tax

rules, when options are liquidated for cash, they will be tax deductible because the rules allowing them to quality as ISO’s are broken. To account for tax

deductibility when 100% of the options are being liquidated for cash, the % tax-deductible should be set to 100%.

— Cash tax savings: The model nets the cash tax savings against the value

of the options. The implicit assumption is that the cash tax savings are used to reduce the debt needed to finance the transaction.

Latest Balance Sheet Items

Sources: Latest 10-Q or 10-K Issues:

— See “Note: Transaction Close not at Year End” in the “Running the Model” section

above. — Complex capital structures: If the company has convertible debt, preferred stock,

or other hybrid debt or equity instruments, the model may need to be modified. Chec …… 此处隐藏：2589字，全部文档内容请下载后查看。喜欢就下载吧 ……