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Private Equity

Lecture 9 - 10: LBO Model, EV to Equity and Exit

Comprehensive quiz covering LBO model construction, types of EBITDA, value creation strategies, the EV-to-Equity bridge, net debt and working capital adjustments, completion mechanisms (locked box vs. completion accounts), governance, and exit routes.

Question 26 of 52

Case

Case study: EV to Equity Bridge

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A target business has been agreed at an Enterprise Value of 200. The following adjustments have been identified during diligence:

  • Cash of 5 and debt of (50)
  • Actual working capital of 55 against normalised working capital of (45)
  • A pension deficit of (3), tax liabilities of (2), capex creditors of (3), and other adjustments of (1)

Complete the EV to Equity Bridge for the case, computing each subtotal and the final equity value.

Fill in each subtotal and the final equity value. Use parentheses for negative amounts. Then check your table.

Enterprise Value: 200

Complete the exercise: Fill in each subtotal and the final equity value. Use parentheses for negative amounts. Then check your table.
Line itemAmount
Enterprise Value
200
Cash
5
Debt
(50)
Total Net Debt Adjustment
Actual Working Capital
55
Normalised Working Capital
(45)
Total Working Capital Adjustment
Pension Deficit
(3)
Tax Liabilities
(2)
Capex Creditors
(3)
Other Adjustments
(1)
Total Other Adjustments
Equity Value