Excel LBO Modeler

Overview — Prerequisites — Instructions — Output — Examples — Error Handling — Resources

Overview

Generates comprehensive 6-sheet LBO models for private equity transactions following industry-standard practices. Automates sources & uses, debt schedules, operating projections, returns analysis, and covenant tracking so PE associates can produce deal models from natural language inputs instead of building from scratch.

Prerequisites

Node.js 18+
@negokaz/excel-mcp-server MCP server configured
Claude Code 1.0+

Instructions

Step 1: Gather Transaction Inputs

Use AskUserQuestion to collect:

Required:

Target company name
Current year EBITDA (or TTM)
Entry valuation multiple (EV/EBITDA, typically 8-12x)
Revenue growth rates for Years 1-5
EBITDA margin (and any expected expansion)
Exit multiple assumption
Hold period (typically 5 years)

Optional (use defaults if not provided):

CapEx as % of revenue (default: 3%)
NWC as % of revenue (default: 10%)
Tax rate (default: 25%)
Transaction fees (default: 2.5%)
Financing fees (default: 2.5%)

Step 2: Validate Inputs

Before building, verify:

Entry multiple is 6-15x EBITDA
Total leverage does not exceed 7x EBITDA
Exit multiple is reasonable (typically <= entry multiple)
Revenue growth rates are 0-30%
EBITDA margin is positive and realistic for the sector

If validation fails, explain the issue and ask for corrected inputs.

Step 3: Structure Financing

Apply typical LBO debt structure:

Revolver: 1-2x EBITDA, undrawn at close
Term Loan A: 2-2.5x EBITDA, 5-7 year amortization, SOFR + 3.50% (default: 8.5%)
Term Loan B: 2-3x EBITDA, minimal amortization, SOFR + 4.50% (default: 9.5%)
Subordinated/Mezzanine: 1-2x EBITDA if needed (default: 13.0%)
Sponsor Equity: Remainder (typically 30-40% of purchase price)

Step 4: Build 6-Sheet Model

Use the Excel MCP server to create:

Sheet 1 - Transaction Summary: Deal terms, sources & uses overview, returns summary (IRR, MoM, hold period).

Sheet 2 - Sources & Uses: Purchase equity value, net debt, enterprise value, transaction fees, financing fees. Sources: debt tranches + sponsor equity.

Sheet 3 - Operating Model (5 Years): Revenue projections, EBITDA, cash flow available for debt service.

Sheet 4 - Debt Schedule: For each tranche: beginning balance, mandatory amortization, excess cash flow sweep, interest expense, ending balance. Waterfall: Revolver first, then TLA, then TLB.

Sheet 5 - Returns Analysis: Exit EV, exit equity value, MoM, IRR. Sensitivity tables: Exit Multiple vs Hold Period, Exit vs Entry Multiple.

Sheet 6 - Debt Covenants: Total Debt/EBITDA (<=6.0x), Senior Debt/EBITDA (<=4.0x), EBITDA/Interest (>=2.0x), (EBITDA-CapEx)/Debt Service (>=1.2x).

All formulas link to Assumptions. No hard-coded values.

Step 5: Format Professionally

Currency format for monetary values
Percentage format for rates (1 decimal)
Freeze top row and left column
Bold headers, cell borders
Color-code: blue for inputs, black for formulas
Conditional formatting on sensitivity tables

Step 6: Return Results

Report exit equity value, MoM, IRR (base case), leverage at entry and exit, key sensitivity scenarios, covenant compliance summary. Flag if leverage >7x or negative cash flow in any year.

Output

.xlsx file with 6 sheets: Transaction Summary, Sources & Uses, Operating Model, Debt Schedule, Returns Analysis, Debt Covenants
Summary text with IRR, MoM, leverage metrics, and covenant status
Warnings for aggressive assumptions (e.g., leverage >7x, exit > entry multiple)

Examples

Standard LBO Request

User: "Build an LBO model for a $50M EBITDA software company at 12x"

Results:
- Entry EV: $600M, Equity Check: ~$265M
- Exit Equity: $1,124M (5yr hold, 12x exit)
- MoM: 4.2x, IRR: 34.2%
- Deleveraging: 7.0x -> 0.9x

Saved to: Software_LBO_Model.xlsx

Minimal Inputs

User: "LBO model but I only know EBITDA is $30M"

Response: Uses PE industry defaults for sector.
All assumptions documented in Transaction Summary for easy adjustment.

Error Handling

Scenario	Response
Leverage >7x EBITDA	Warn structure may not be achievable, recommend reduction
Negative cash flow in any year	Flag concern, suggest reducing leverage or extending amortization
Exit multiple > entry multiple	Note assumption, flag as aggressive
IRR < 20%	Flag as below typical PE hurdle rate
Covenant breach in projections	Alert and suggest restructuring debt

Edge Cases

If user provides no company name, use "Target Co" as placeholder
If user wants dividend recap, add Year 3 refinancing scenario
If user wants multiple scenarios, create Base/Bull/Bear columns

Resources

${CLAUDE_SKILL_DIR}/references/REFERENCE.md - LBO best practices, debt structures by industry

excel-lbo-modeler