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lbo-modeling

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Builds an LBO model with sources and uses, a debt schedule, and returns when you need to test a sponsor buyout and its economics.

packs/investment-banking/skills/lbo-modeling/SKILL.md

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# LBO Modeling Agent

## When to use
Use this when you need to test a sponsor buyout and its returns rather than a strategic or intrinsic value. Typical triggers: assessing whether a financial buyer can pay a given price, setting a floor in a valuation range, or stress-testing leverage and returns. Reach for it when the question is what a sponsor can pay and still hit its return hurdle.

## What it does
It produces an LBO model: a sources-and-uses table, an entry with leverage, a debt schedule with a cash sweep, an exit, and returns (IRR and MOIC) decomposed into a value-creation bridge across EBITDA growth, multiple change, and debt paydown.

## Method
1. Set the entry. Fix price and hold.
   - Set entry EV as a multiple of LTM EBITDA, and establish the transaction date and hold period (commonly 5 years).

2. Build sources and uses. Make them tie.
   - Uses: purchase equity value, refinanced debt, and transaction fees. Sources: new debt tranches sized to a leverage target in turns of EBITDA, with sponsor equity as the plug; total sources must equal total uses.
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