LBO Model Disclaimer and Instructions:

Disclaimer:

Please note this is a sample LBO model created for illustrative purposes only. This model simplifies many of the key inputs
in a traditional LBO model. This model should not be used for investment analysis or decision making purposes. This model
should only be used for educational purposes. Do not rely solely on this model to understand how LBO models function. Ther
are other key variables in LBO models that are not included in this model. Muppies is not liable for any inaccuracies or mistak
in this model. Please contact info@muppies.org if you have any questions or concerns. This model is solely for Muppies mem
non members shall not use this model without explicit authorization from Muppies officers.

Instructions:
This model has been designed by a Muppies member to help you with your interview process. Following are some
steps you may need to take when evaluating an interview case LBO:

1. Build Functioning Historical and Forecasted Income Statement, Balance Sheet and Cash Flow Statements (Not shown in m
2. Determine Impact on Balance Sheet on date of acquisition (e.g Impact on Goodwill etc.) - (Not shown in model)
3. Value company using traditional valuation metrics (DCF, Comparable company comps) - (Not shown in model)
4. Calculate IRR on investment given a leveraged buy-out using various assumptions (shown in model)
5. Incorporate both quantitative and qualitative measures to determine investment decision

many of the key inputs

g purposes. This model
BO models function. There
ny inaccuracies or mistakes
is solely for Muppies members

wing are some

tements (Not shown in model)

wn in model)

wn in model)

Transaction Overview
Company Overview
Ticker
Stock Price (02/03/08)
Offer Premium
Purchase Share Price
Fully Diluted Shares O/S
Equity Value
Add: Short-term Debt
Add: Long-term Debt
Add: Pension Obligations
Less: Operating Cash
Less: Excess Cash
Total Enterprise Value

Halliburton Company
hal
$ 32.40
20%
$ 38.88
978.25
38,034
2,796
(675)
(3,704)
36,451

Implied Multiples
EV/Rev 06
EV/Rev 07
EV/EBITDA 06
EV/EBITDA 07
P/E 06
P/E 07

Pre-Acquistion

Leverage Multiples
Debt/EBITDA
EBITDA/Interest

Pre-Acquistion

Exit
Exit Year
Exit Multiple

2010
9.5x

Other
Libor Rate
Op. Cash (% rev
Interest on cash

5.2%
3.0%
5.0%

Returns
IRR
MOI

37%
2.6x

Acquisition
1.3x
2.0x
7.8x
6.6x
15.0x
13.1x

1.6x
2.4x
9.4x
8.0x
18.0x
15.8x

Sources of funds
Excess Cash on Balance Sheet
Existing Debt
Senior Bank Term "A"
Senior Bank Term "B"
Senior Subordinated Debt
Junior Subordinated Debt
Preferred Stock
Common Equity
Total Sources of funds
Uses of funds
Equity Purchase Price
Debt Retired
Cash Infusion
Advisory fees
Financing fees
Other uses
Other uses
Total Uses Of funds
Overall Check

Acquisition
Max
0.7x
4.1x
22.1x
2.5x

Amount
EBITDA Mult. Libor Spread
500
9,123
4,561
4,561
4,561

2.0x
1.0x
1.0x
1.0x

Interest Rate

2.0%
3.0%
3.5%
4.0%

7.2%
8.2%
8.7%
9.2%

9.4x
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504

9.9x
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504

18,664
41,971

38,034
2,796
1.5%
1.5%

571
571

41,971
ok

4.1x
2.5x

IRR Calculations

IRR
MOI

57,922
13,102
3,204
48,024
18,664
37%
2.6x

Exit
Multi
ples

Exit Enterprise Value

Debt on books
Cash on Books
Exit Equity Value
Entry Equity Value

Exit Year
3 Years

2010
9.5x
6,097

37%
11.4x
10.9x
10.4x
9.9x
9.4x
8.4x
7.4x
6.4x
5.4x
4.4x

2010
47%
45%
42%
39%
36%
30%
24%
16%
7%
-3%

5 Years
8 Years
2012
2015
32%
22%
31%
21%
30%
21%
28%
20%
27%
19%
24%
18%
21%
16%
17%
14%
13%
12%
8%
9%

EBIT
DA
Mar
gins

Exit Year
Exit Multiple
Exit EBITDA

37%
21%
20%
19%
18%
17%
16%
15%
14%
13%

Exit Multiple in Year:

2010
8.4x
8.9x
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504

10.4x
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504
Err:504

Forecast Assumptions
Choose
Historical (Years 1-3)
Analyst (Year 1-3)
User Defined
1
2
3
4
5
6
7
8
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
43
44
45
46
47
48
49
50
51
52
53
54

Income Statement
Revenue Growth
Historical growth rate
Analyst Estimates
User Defined
EBITDA margins
Historical Margins
Analyst Estimates
User Defined
Tax Rate
Historical Margins
Analyst Estimates
User Defined
D&A (% of Revenue)
Balance Sheet
WC (% of revenue)
Operating Cash (% rev)
Days Inventory
Days Receivables O/S
Prepaid-expense (% rev)
Days Payable O/S
Accrued expenses (% rev
Choose capex method
PP&E (% of revenue)
Capex (% of revenue)

2
1
2
3
2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

-3.4%

30.0%

22.4%

1.9%

11.0%

-33.0%
11.0%
-33.0%

14.8%
-33.0%
14.8%

14.2%
14.8%
14.2%

11.0%
11.4%
11.0%

7.7%
7.9%
7.7%

4.5%
4.5%
4.5%

4.5%
4.5%
4.5%

4.5%
4.5%
4.5%

2.3%

7.2%

6.6%

14.6%

17.2%

30.3%
17.2%
30.3%

27.3%
30.3%
27.3%

27.8%
27.3%
27.8%

27.8%
27.8%
27.8%

27.8%
27.8%
27.8%

27.8%
27.8%
27.8%

27.8%
27.8%
27.8%

27.8%
27.8%
27.8%

-26.9%

43.4%

37.5%

2.8%

34.3%

4.0%

3.2%

2.6%

2.5%

2.3%

34.3%
34.3%
34.3%
34.3%
2.3%

34.3%
34.3%
34.3%
34.3%
2.3%

34.3%
34.3%
34.3%
34.3%
2.3%

34.3%
34.3%
34.3%
34.3%
2.3%

34.3%
34.3%
34.3%
34.3%
2.3%

34.3%
34.3%
34.3%
34.3%
2.3%

34.3%
34.3%
34.3%
34.3%
2.3%

34.3%
34.3%
34.3%
34.3%
2.3%

23.4%
3.0%
22
95
0.0%
32
3.0%

23.2%
3.0%
17
107
0.0%
42
2.5%

21.8%
3.0%
15
106
0.0%
46
2.4%

18.5%
3.0%
20
86
0.0%
41
3.2%

17.4%
3.0%
25
76
0.0%
38
3.4%

17.9%
3.0%
25
76
0.0%
38
3.4%

17.8%
3.0%
25
76
0.0%
38
3.4%

17.8%
3.0%
25
76
0.0%
38
3.4%

17.8%
3.0%
25
76
0.0%
38
3.4%

17.8%
3.0%
25
76
0.0%
38
3.4%

17.8%
3.0%
25
76
0.0%
38
3.4%

17.8%
3.0%
25
76
0.0%
38
3.4%

17.8%
3.0%
25
76
0.0%
38
3.4%

1
21.0%
6.1%

15.5%
3.2%

12.8%
2.9%

13.1%
3.2%

13.5%
4.0%

13.5%
4.0%

13.5%
4.0%

13.5%
4.0%

13.5%
4.0%

13.5%
4.0%

13.5%
4.0%

13.5%
4.0%

13.5%
4.0%

2003
16,246
30.0%
1,166
7.2%
(518)

2004
19,884
22.4%
1,320
6.6%
(509)

2005
20,266
1.9%
2,953
14.6%
(504)

2006
22,504
11.0%
3,875
17.2%
(527)

2007
15,074
-33.0%
4,561
30.3%
(353)

2008
17,312
14.8%
4,725
27.3%
(405)

2009
19,770
14.2%
5,495
27.8%
(463)

2010
21,938
11.0%
6,097
27.8%
(514)

2011
23,635
7.7%
6,569
27.8%
(553)

2012
24,698
4.5%
6,864
27.8%
(578)

2013
25,810
4.5%
7,173
27.8%
(604)

2014
26,971
4.5%
7,496
27.8%
(632)

(369)
(375)
(398)
(421)
(1,563)
3.0x

(268)
(375)
(398)
(421)
(1,463)
3.8x

(133)
(375)
(398)
(421)
(1,328)
4.6x

(327)
(398)
(421)
(1,147)
5.7x

(81)
(398)
(421)
(900)
7.6x

(175)
(421)
(596)
12.0x

(244)
(244)
30.7x

160

160

160

160

160

160

160

Cash Flows
Sales
growth
EBITDA
margins
Less D&A
Senior Bank Term "A"
Senior Bank Term "B"
Senior Subordinated Debt
Junior Subordinated Debt
Less: Interest Expense
EBITDA / Interest
Add: Interest Income

2002
12,498
289
(505)

(113)
2.6x

(139)
8.4x

(229)
5.8x

(207)
14.3x

(175)
22.1x

(660)
(375)
(398)
(421)
(1,854)
2.5x

32

30

44

64

162

160

55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86

4.4%

2.3%

2.0%

3.6%

4.4%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

(297)
(80)
505

539
(234)
518
(852)
(114)
(143)

626
(235)
509
(555)
(161)
184

2,306
(64)
504
580
(259)
3,067

3,335
(1,144)
527
(168)
(716)
1,834

2,514
(863)
353
1,222
795
4,022

2,916
(1,000)
405
(381)
(546)
1,393

3,729
(1,279)
463
(440)
(611)
1,862

4,415
(1,515)
514
(385)
(602)
2,428

5,029
(1,725)
553
(302)
(562)
2,994

5,546
(1,902)
578
(189)
(491)
3,542

6,133
(2,104)
604
(198)
(513)
3,923

6,780
(2,326)
632
(206)
(536)
4,344

5,101
9,123
(4,022)
5,101

3,708
5,101
(1,393)
3,708

1,845
3,708
(1,862)
1,845

1,845
(1,845)
-

Senior Bank Term "B"

BOY Debt
Debt Paydown
EOY Debt

4,561
4,561
4,561

4,561
4,561
4,561

4,561
4,561
4,561

3,979
4,561
(582)
3,979

Senior Subordinated Debt

BOY Debt
Debt Paydown
EOY Debt

4,561
4,561
4,561

4,561
4,561
4,561

4,561
4,561
4,561

Junior Subordianted Debt

BOY Debt
Debt Paydown
EOY Debt

4,561
4,561
4,561

4,561
4,561
4,561

18,785
4.1x

17,392
3.7x

EBT
Less: Taxes
ADD: D&A
Less Changes in Working Capital
Less: Gross Capex
Free Cash Flow Before Debt Paydown
Debt Paydown Schedule
Senior Bank Term "A"
BOY Debt
Debt Paydown
EOY Debt

Total EOY Debt

Debt/EBITDA

985
3,979
(2,994)
985

985
(985)
-

4,561
4,561
4,561

4,561
4,561
4,561

2,005
4,561
(2,556)
2,005

2,005
(2,005)
-

4,561
4,561
4,561

4,561
4,561
4,561

4,561
4,561
4,561

4,561
4,561
4,561

2,644
4,561
(1,918)
2,644

2,644
(2,644)
-

15,530
2.8x

13,102
2.1x

10,108
1.5x

6,566
1.0x

2,644
0.4x

0.0x

1
2
3
4
5
6
7
8
9
10
11
12
13
14

Reinvstment Summary
Working Capital
Excess Cash (excluded)
Operating Cash
Inventory
Accounts Receivable
Pre-paid Expenses
Accounts Payable
Accrued Expenses
Working Capital

2002
732
375
734
3,257
(1,077)
(370)
2,919

2003
1,328
487
695
4,765
(1,776)
(400)
3,771

2004
2,211
597
791
5,751
(2,339)
(473)
4,327

Capex
Gross PP&E
Accumulated Depreciation
Net PP&E
Depreciation
Depreciation (% of NPPE)

21%
5,952
(3,323)
2,629
0
0%

16%
6,066
(3,540)
2,526
(217)
-9%

(764)
-

(114)
(515)
(114)

Capex based on PP&E

Capex based on Capex/rev
Selected Capex

2006
3,704
675
1,261
4,674
(1,931)
(764)
3,915
4%
14%
7,202
(4,154)
3,048
(316)
-10%

2007
3,204
452
712
3,131
(1,091)
(512)
2,693
-31%

2008
3,204
519
853
3,596
(1,306)
(588)
3,074
14%

2009
3,204
593
967
4,106
(1,481)
(671)
3,514

2010
3,204
658
1,073
4,557
(1,643)
(745)
3,900

2011
3,204
709
1,156
4,909
(1,770)
(802)
4,201

2012
3,204
741
1,208
5,130
(1,850)
(839)
4,390

2013
3,204
774
1,262
5,361
(1,933)
(876)
4,588

2014
3,204
809
1,319
5,602
(2,020)
(916)
4,794

13%
6,227
(3,674)
2,553
(134)
-5%

2005
1,783
608
953
4,801
(1,967)
(648)
3,747
-13%
13%
6,486
(3,838)
2,648
(164)
-6%

6,407
(4,366)
2,042
(212)
-10%

6,954
(4,609)
2,345
(243)
-10%

7,564
(4,886)
2,678
(278)
-10%

8,166
(5,194)
2,971
(308)
-10%

8,727
(5,526)
3,201
(332)
-10%

9,218
(5,873)
3,345
(347)
-10%

9,731
(6,236)
3,496
(362)
-10%

10,267
(6,614)
3,653
(379)
-10%

(161)
(575)
(161)

(259)
(651)
(259)

(716)
(891)
(716)

795
(597)
795

(546)
(685)
(546)

(611)
(783)
(611)

(602)
(869)
(602)

(562)
(936)
(562)

(491)
(978)
(491)

(513)
(1,022)
(513)

(536)
(1,068)
(536)

2/3/2008
Checks
Sources & Uses
Balance Sheet
Cash Usage
Row for Hlookup

OK
OK
OK
OK
OK

2015
4.5%
4.5%
4.5%

27.8%
27.8%
27.8%
34.3%
34.3%
34.3%
34.3%
2.3%

17.8%
3.0%
25
76
0.0%
38
3.4%

13.5%
4.0%

2015
28,185
4.5%
7,833
27.8%
(660)
160

5.0%
7,333
(2,516)
660
(216)
(560)
4,702

0.0x

2015
3,204
846
1,378
5,854
(2,111)
(957)
5,010

10,828
(7,010)
3,817
(396)
-10%
(560)
(1,116)
(560)

hal

995
Income Statement
Sales
COGS
SG&A
Operating income
EBITDA
D&A
EBIT
Interest & Inv Income
Interest Expense
EBT
Tax provision
Net income
EPS

12,939

(216)

2002
996

2003
997

2004
998

12,498
12,379
335
(216)

16,246
15,268
330
648

19,884
18,720
353
811

289
505
(216)
32
(113)
(329)
(80)
(346)
(0.40) $

1,166
518
648
30
(139)
509
(234)
339
0.39 $

1,320
509
811
44
(229)
582
(235)
374
0.42 $

2005 12/06
03/07
999
497
498
20,266
17,437
380
2,449

6,016
36
1,043

2,953
1,174
504
2,449
1,043
64
52
(207)
(43)
2,242
(64)
343
2,327
667
2.24 $ 0.65 $

3,422
2,566
69
787
918
787
38
(38)
259
529
0.52

864
864

868
874

874
882

1,010
1,038

996
1,030

992
1,025

1,107
734
3,257
462
5,560

1,815
695
4,765
###
644
7,919

2,808
791
5,751
680
10,030

2,391
953
4,801
1,241
9,386

4,379
1,261
4,674
###
869
11,183

3,043
1,430
2,700
4,542
11,715

Gross PP&E
D&A
Net PP&E

5,952
(3,323)
2,629

6,066
(3,540)
2,526

6,227
(3,674)
2,553

6,486
(3,838)
2,648

7,202
(4,154)
3,048

6,646
(3,888)
2,758

Goodwill
Other Intangible Assets
Other Long-term assets
Total Assets

723
3,932
12,844

670
###
4,384
15,499

795
2,486
15,864

765
2,249
15,048

775
###
1,814
16,820

593
2,572
17,638

Accounts Payable
Accrued Expenses
Short-term Debt
Total Current Liabilities

1,077
370
49
1,496

1,776
400
18
2,194

2,339
473
15
2,827

1,967
648
2,615

1,931
764
###
2,695

739
383
1,122

Long-term Debt
Minority Interest
Other Debt
Total Liabilities

1,181
71
6,538
9,286

3,415
100
7,243
12,952

3,593
108
5,404
11,932

2,813
145
3,103
8,676

2,786
447
3,516
9,444

2,785
65
5,774
9,746

Shares - primary
Shares - diluted
Balance Sheet
Cash
Inventory
A/R
Pre-paid Expenses
Other Current Assets
Total Current Assets

Preferred Equity

###

###

Common Equity
Other Equity
Total Liabilities & Equity
Checks
Balance Sheet balance
Assets Check
Supplemental
Depreciation
Capex

3,558
12,844

(764)

2,547
###
15,499

###
###

###
(515)

3,932
15,864

6,372
15,048

7,376
###
16,820

7,892
17,638

###
###

(575)

(651)

###

06/07

499

09/07
500

2006
1000

3,735
2,809
82
844

3,928
2,956
63
909

22,504
18,706
450
3,348

984

1,055

844
36
(41)

909
26
(39)

284
595
0.63

152
726
0.79

3,875
527
3,348
162
(175)
3,173
(1,144)
2,272
2.16

905
942

880
917

1,014
1,054

2,223
1,500
2,948
601
7,272

1,891
1,560
3,109
661
7,221

4,379
1,261
4,674
869
11,183

6,898
(3,910)
2,988

7,328
(3,991)
3,337

7,202
(4,154)
3,048

594
1,135
11,989

731
1,180
12,469

775
1,814
16,820

856
447
1,303

798
525
1,323

1,931
764
2,695

2,784
71
1,973
6,131

2,796
90
2,063
6,272

2,786
447
3,516
9,444

5,858
11,989

6,197
12,469

7,376
16,820

###

(891)