Lessons
Results
Vocabulary and formulas
Every term used in the lessons, with its formula where there is one and a worked example. Terms marked f(x) have a formula. Examples use the same company throughout: revenue $50M, EBITDA $10M, bought for $100M with $60M debt at 7%.
How the numbers connect
All terms
Don't confuse these
The pairs people mix up most, and the one line that separates them. Tap either term for its full definition.
LBO playground
Build the example deal from Lesson 10 and change one number at a time. Watch which lever, EBITDA growth, the exit multiple or debt paydown, moves the return most.
LBO playground
Move the sliders. Cash left after interest pays down debt each year. Fees and taxes are kept out to keep it simple.
| Purchase price (EV) | |
| Debt / equity at entry | |
| Leverage at entry | |
| EBITDA at exit | |
| Exit value (EV) | |
| Debt left at exit | |
| Equity back to the fund | |
| Interest coverage, year 1 |
Where the money came from
Value creation: the three ways an LBO makes its return, with each one's share of the gain. They always add up to the equity gain. In rental terms: higher rent (EBITDA growth), buyers paying more per dollar of rent (multiple change), and the mortgage your tenants paid down (debt paydown).
Debt schedule
| Year | EBITDA | Interest | Cash to repay | Debt end | Debt / EBITDA |
|---|
The LBO, step by step
- Price it: EBITDA times the entry multiple gives the purchase price.
- Fund it (sources and uses): split the price into debt and equity.
- Project it: grow EBITDA each year.
- Pay it down (debt schedule): cash left after interest repays debt.
- Sell it: exit EBITDA times the exit multiple gives the sale price.
- Score it: sale price minus debt left is the equity back. Divide by equity in for MOIC, then turn that into a yearly IRR.
Learning plan
How it fits together
- Track A: Financial services foundations first, so the map is clear.
- Track B: Private equity, building the 10 projects below.
- Track C: Wealth, insurance and planning.
Each session: a short lesson, then build or quiz yourself, then write one line on what you can now do. Ticks stay in this browser.