LBO and Private Equity

Principles of LBO

• Definition of LBO
• Review of the LBO markets in Europe
• Typical scheme of a LBO operation (Holdco/Opco, dividend allocation, tax integration, financial assistance)
• Creating value for shareholders
• IRR and ROI
• Financial leverage
• Other levels of leverage (tax, legal, operational)
• Acquisition and exit multiples

• Practical workshop

• Case studies

Origination and Acquisition Process

• Private equity players (funds, investment banks, senior lenders, mezzanine investors, advisors)
• Identifying targets
• “Deal killers”
• Assessing risks
• Open bid
• Specifics of “Public to Private” (LBOs on listed targets)

Financial Structuring

• Various types of debt in an LBO
• Senior and subordinated debt: principles of subordination
• Senior debt tranching
• Mezzanine
• Typical financing structures
• Assessing the target’s repayment capabilities
• Business Plan and Bank Case
• Free cash-flows and dividend requirements

• Practical workshop

• Simple structuring

Credit agreement

• Principles (security, covenants)
• Usual clauses

Other Structural Features

• Management Packages
• Hard equity/sweet equity
• Shareholder Purchase Agreement (“SPA”)
• Life of the deal: governance and shareholder agreement

• Practical workshop

• Target identification and bankability
• Identifying the optimal structure
• Setting the acquisition price with respect to a target IRR

Problem Cases and Work out Techniques

• Alarm signals
• Restructuring
• Liquidation

Latest Market Trends

• Credit crisis, macro-economic environment
• LBO and private equity market trends
• Recaps and refinancings , impact on the IRR