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x Simple LBO Model Burger King Advanced LBO Model - Part 1
https://youtube.com/live/Q7qNxmxkm8o https://youtube.com/live/1ZJsA_tjQNc
- Assumptions provided - Find all assumptions based on real tx figures
- Sources and uses table - Sources and uses table
- Basic operating model - Operating model with 2 scenarios
- Basic debt schedule - Debt schedule with circuit breaker
- IRR calculations - IRR calculations
^This model is for this video, so click for the tutorial
x Links
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Burger King Advanced LBO Model - Parts 2 and 3
Videos Coming Later
real tx figures - Revenue cases
- Separate historicals tab
- Forecasting cash flow statement
- Forecasting balance sheet
- Additional debt tranches (e.g. revolver)
- Mandatory debt repayments
click for the tutorial - PIK
- Cash sweep
- LIBOR
- Amortization of financing fees
- Sensitivity tables
- Adding a DCF
71QplJWp1Rrm0dkWjjIY2cf4jTYSU0t2
LBO
x Switches
Circuit breaker
Case
x Assumptions
Transaction Background
Company name
Ticker
Latest closing share price
Latest closing share price date
Transaction Financials and Assumptions
LTM EBITDA
Debt
Cash
Minimum Cash
Exit Multiple
Capital Structure
Amount xEBITDA
Secured term loan - USD tranche
Secured term loan - EUR tranche
Senior notes
Total 0 0.0x
x Sources and Uses
Sources
Amount xEBITDA % Capital
Secured term loan - USD tranche
Secured term loan - EUR tranche
Senior notes
Cash on hand
Sponsor equity
Total
x Financials (6/30 FYE)
Assumptions 2008A 2009A 2010A
Revenue growth
Gross margin
OpEx margin
Tax rate
x Operating Model 2008A 2009A 2010A
Revenue
% growth
COGS
% of sales
Gross Profit
% of sales
OpEx
% of sales
EBIT
% of sales
EBIT - Conservative
% of sales
EBIT - Management
% of sales
Interest Expense
Interest Income
EBT
% of sales
Taxes
% tax rate
Net Income
% of sales
EBITDA Reconciliation
EBIT
D&A
Adjustments
EBITDA
% of sales
EBITDA
% of sales
EBITDA - Conservative
% of sales
EBITDA - Management
% of sales
x Cash Flow Items 2008A 2009A 2010A
Current Operating Assets
Trade and notes receivable
Prepaids and other current assets
Curernt Operating Liabilities
Accounts and drafts payable
Accrued advertising
Other accrued liabilities
Change in Net Working Capital
% of sales
D&A
% of sales
D&A - Conservative
% of sales
D&A - Management
% of sales
CapEx
% of sales
x Levered Free Cash Flow 2008A 2009A 2010A
Net Income
D&A
CapEx
Change in NWC
Mandatory Debt Repayments
Levered Free Cash Flow
x Debt Schedule
Debt Paydown 2008A 2009A 2010A
Cash
Beginning Balance
Inflow / (Outflow)
Ending Balance
Secured term loan - USD tranche
Beginning Balance
Paydown
Ending Balance
Secured term loan - EUR tranche
Beginning Balance
Paydown
Ending Balance
Senior notes
Beginning Balance
Paydown
Ending Balance
Total Debt
Beginning Balance
Paydown
Ending Balance
CHECK
x Interest 2008A 2009A 2010A
Cash
Interest income rate
Secured term loan - USD tranche
Interest rate
Secured term loan - EUR tranche
Interest rate
Senior notes
Interest rate
Total interest expense
Blended interest rate
x IRR
LTM EBITDA at Exit
Exit Multiple
Enterprise Value
Net Debt
Sponsor Equity Value
Sponsor Equity at Entry
MOIC
x IRR
IRR (for reference)
Valuation at Entry
Offer value / share
% Premium / discount
Offer value (Equity value)
Diluted shares outstanding
Debt
Cash
Enterprise Value
LTM EBITDA
Entry Multiple
Interest (%) Fees (%) Fee ($) Term Amortization
0 0
Uses
Amount xEBITDA % Capital
2011E 2012E 2013E 2014E 2015E
2011E 2012E 2013E 2014E 2015E
2011E 2012E 2013E 2014E 2015E
2011E 2012E 2013E 2014E 2015E
2011E 2012E 2013E 2014E 2015E
Step
Note
Negative on cfs for assets = outflow of cash
Positive on cfs for assets = inflow of cash
Negative on cfs for liabilities = inflow of cash
Positive on cfs for liabilities = outflow of cash
LBO
x Switches
Circuit breaker ON
Case 1 Conservative
x Assumptions
Transaction Background
Company name Burger King
Ticker BKC
Latest closing share price 18.86
Latest closing share price date 9/1/2010
Transaction Financials and Assumptions
LTM EBITDA 445
Debt 755
Cash 188
Minimum Cash 118
Exit Multiple 8.8x
Capital Structure
Amount xEBITDA
Secured term loan - USD tranche 1,510 3.4x
Secured term loan - EUR tranche 334 0.8x
Senior notes 800 1.8x
Total 2,644 5.9x
x Sources and Uses
Sources
Amount xEBITDA % Capital
Secured term loan - USD tranche 1,510 3.4x 35%
Secured term loan - EUR tranche 334 0.8x 8%
Senior notes 800 1.8x 19%
Cash on hand 69 0.2x 2%
Sponsor equity 1,560 3.5x 37%
Total 4,274 9.6x 100%
x Financials (6/30 FYE)
Assumptions 2008A 2009A 2010A
Revenue growth -- 3.4% (1.4%)
Gross margin 37.3% 35.2% 35.5%
OpEx margin 22.9% 21.8% 22.2%
Tax rate 35.3% 29.7% 34.3%
x Operating Model 2008A 2009A 2010A
Revenue 2,455 2,537 2,502
% growth -- 3.4% (1.4%)
COGS 1,538 1,644 1,615
% of sales 62.7% 64.8% 64.5%
Gross Profit 917 894 887
% of sales 37.3% 35.2% 35.5%
OpEx 563 554 555
% of sales 22.9% 21.8% 22.2%
EBIT 354 339 333
% of sales 14.4% 13.4% 13.3%
EBIT - Conservative
% of sales
EBIT - Management
% of sales
Interest Expense 67 57 50
Interest Income 6 3 1
EBT 293 285 284
% of sales 11.9% 11.2% 11.4%
Taxes 103 85 98
% tax rate 35.3% 29.7% 34.3%
Net Income 190 200 187
% of sales 7.7% 7.9% 7.5%
EBITDA Reconciliation
EBIT 354 339 333
D&A 96 98 112
Adjustments 0 4 0
EBITDA 450 441 445
% of sales 18.3% 17.4% 17.8%
EBITDA 450 441 445
% of sales 18.3% 17.4% 17.8%
EBITDA - Conservative
% of sales
EBITDA - Management
% of sales
x Cash Flow Items 2008A 2009A 2010A
Current Operating Assets
Trade and notes receivable 9 (2) 16
Prepaids and other current assets (15) 35 1
Curernt Operating Liabilities
Accounts and drafts payable 21 3 (21)
Accrued advertising 11 (8) 6
Other accrued liabilities (6) (21) (22)
Change in Net Working Capital (32) 59 54
% of sales (1.3%) 2.3% 2.2%
D&A 96 98 112
% of sales 3.9% 3.9% 4.5%
D&A - Conservative
% of sales
D&A - Management
% of sales
CapEx 178 204 150
% of sales 7.3% 8.0% 6.0%
x Levered Free Cash Flow 2008A 2009A 2010A
Net Income
D&A
CapEx
Change in NWC
Mandatory Debt Repayments
Levered Free Cash Flow
x Debt Schedule
Debt Paydown 2008A 2009A 2010A
Cash
Beginning Balance
Inflow / (Outflow)
Ending Balance 188
Secured term loan - USD tranche
Beginning Balance
Paydown
Ending Balance 1,510
Secured term loan - EUR tranche
Beginning Balance
Paydown
Ending Balance 334
Senior notes
Beginning Balance
Paydown
Ending Balance 800
Total Debt
Beginning Balance
Paydown
Ending Balance 2,644
CHECK
x Interest 2008A 2009A 2010A
Cash 1
Interest income rate 0.5%
Secured term loan - USD tranche
Interest rate
Secured term loan - EUR tranche
Interest rate
Senior notes
Interest rate
Total interest expense
Blended interest rate
x IRR
LTM EBITDA at Exit
Exit Multiple
Enterprise Value
Net Debt
Sponsor Equity Value
Sponsor Equity at Entry
MOIC
x IRR
IRR (for reference) 23.0%
Valuation at Entry
Offer value / share 24.00
% Premium / discount 27%
Offer value (Equity value) 3,325
Diluted shares outstanding 139
Debt 755
Cash 188
Enterprise Value 3,893
LTM EBITDA 445
Entry Multiple 8.8x
Interest (%) Fees (%) Fee ($) Term Amortization
6.8% 2.7% 41 6 yrs 7
7.1% 2.5% 8 6 yrs 1
10.2% 2.5% 20 8 yrs 3
69 11
Uses
Amount xEBITDA % Capital
Equity payment 3,325 7.5x 78%
Debt refinancing 755 1.7x 18%
Transaction fees 91 0.2x 2%
Financing fees 69 0.2x 2%
Other 32 0.1x 1%
Total 4,274 9.6x 100%
2011E 2012E 2013E 2014E 2015E
2.9% (18.3%) (10.4%) 1.4% 6.0%
35.5% 37.2% 39.0% 40.7% 42.5%
22.2% 20.0% 17.8% 15.6% 13.4%
33.8% 33.3% 32.8% 32.3% 31.8%
2011E 2012E 2013E 2014E 2015E
2,574 2,102 1,884 1,910 2,024
2.9% (18.3%) (10.4%) 1.4% 6.0%
1,661 1,320 1,150 1,132 1,165
64.5% 62.8% 61.0% 59.3% 57.5%
913 782 734 778 859
35.5% 37.2% 39.0% 40.7% 42.5%
570 420 335 297 270
22.2% 20.0% 17.8% 15.6% 13.4%
342 363 399 480 589
13.3% 17.3% 21.2% 25.2% 29.1%
342 363 399 480 589
13.3% 17.3% 21.2% 25.2% 29.1%
351 426 465 528 589
13.6% 20.3% 24.7% 27.6% 29.1%
0 0 0 0 0
0 0 0 0 0
342 363 399 480 589
13.3% 17.3% 21.2% 25.2% 29.1%
116 121 131 155 187
33.8% 33.3% 32.8% 32.3% 31.8%
227 242 268 325 402
8.8% 11.5% 14.3% 17.0% 19.9%
447 448 476 558 672
17.4% 21.3% 25.3% 29.2% 33.2%
447 448 476 558 672
17.4% 21.3% 25.3% 29.2% 33.2%
464 518 563 620 685
18.0% 24.6% 29.9% 32.5% 33.8%
2011E 2012E 2013E 2014E 2015E
27 22 20 20 21
1.1% 1.1% 1.1% 1.1% 1.1%
105 86 77 78 82
4.1% 4.1% 4.1% 4.1% 4.1%
105 86 77 78 82
4.1% 4.1% 4.1% 4.1% 4.1%
113 92 98 92 96
4.4% 4.4% 5.2% 4.8% 4.7%
183 149 134 136 144
7.1% 7.1% 7.1% 7.1% 7.1%
2011E 2012E 2013E 2014E 2015E
227 242 268 325 402
105 86 77 78 82
183 149 134 136 144
27 22 20 20 21
0 0 0 0 0
122 156 192 247 319
2011E 2012E 2013E 2014E 2015E
118 118 118 118 118
0 0 0 0 0
118 118 118 118 118
1,510 1,388 1,232 1,041 793
122 156 192 247 319
1,388 1,232 1,041 793 474
334 334 334 334 334
0 0 0 0 0
334 334 334 334 334
800 800 800 800 800
0 0 0 0 0
800 800 800 800 800
2,644 2,523 2,366 2,175 1,927
122 156 192 247 319
2,523 2,366 2,175 1,927 1,608
1 TRUE TRUE TRUE TRUE
2011E 2012E 2013E 2014E 2015E
0 0 0 0 0
0.5% 0.5% 0.5% 0.5% 0.5%
0 0 0 0 0
6.8% 6.8% 6.8% 6.8% 6.8%
0 0 0 0 0
7.1% 7.1% 7.1% 7.1% 7.1%
0 0 0 0 0
10.2% 10.2% 10.2% 10.2% 10.2%
0 0 0 0 0
0% 0% 0% 0% 0%
672
8.8x
5,881
1,490
4,391
1,560
2.8x
23.0%
Step
0.00%
1.75%
2.20%
0.50%
Note
Negative on cfs for assets = outflow of cash
Positive on cfs for assets = inflow of cash
Negative on cfs for liabilities = inflow of cash
Positive on cfs for liabilities = outflow of cash
Diluted Share Count Calculation
x Full Diluted Shares
Offer price 24.00
Basic shares outstanding (latest filing) 136.6
In-the-money exercisable options 7.4
Total proceeds ($mm) 129.4
Total shares repurchased (mm) 5.4
Net dilutive options 2.0
Dilutive impact of shares from other securities 1.7
Settled stock based comp 2.0
Net diluted shares outstanding 138.6
x Options outstanding
Outstanding Exercise price Dilutive Shares
Tranche 1 7.4 17.43 7.42
Tranche 2 0.0
Tranche 3 0.0
Tranche 4 0.0
Tranche 5 0.0
Tranche 6 0.0
Tranche 7 0.0
Tranche 8 0.0
Tranche 9 0.0
Tranche 10 0.0
x Total 7.42
