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European Tactical Research
Guide to using our LBO model
The Goldman Sachs Group, Inc.
October 2009
The Goldman Sachs Group, Inc. does and seeks to do business withcompanies covered in its research reports. As a result, investors should be awarethat the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor inmaking their investment decision.For RegAC certification, see the end of the text. Other important disclosures follow the RegAC certification, or go to www.gs.com/research/hedge.html.Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRAin the U.S.
Tactical Resarch GroupEloise Goulder 
Goldman Sachs International44-20-7552-1346eloise.goulder@gs.com
Michael Chanin
Goldman Sachs International44-20-7552-5797michael.chanin@gs.com
Tian Lu
Goldman Sachs International44-20-7552-3725tian.lu@gs.com
Amy Yung
Goldman Sachs International44-20-7552-1644amy.yung@gs.com
 
Goldman Sachs Global Investment Research2
Introduction
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We have developed a model to analyse the attractiveness of stocks in our non-financial coverage to private equity.
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The model takes analysts’forecasts from the Quantum database and then usesentered exit multiples and bid premiums to calculate an IRR.
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The model can also show the required sales CAGR or margin improvementrequired to achieve a specific IRR.
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These slides intend to give an overview of how the model works.The model can be found on the TRG page
https://360.gs.com/gs/portal/research/teams/tacticalresearch/
 
Goldman Sachs Global Investment Research3
Background
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We have been publishing the excel LBO model and LBO research sinceSeptember 2006.
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We publish two screens. The ‘Top 20 stocks by IRR’shows those stocks in our coverage with the highest IRRsin the LBO framework, regardless of analystviews and other metrics. The ‘overlay screen’also filters by analyst ‘Buy’recommendations and top quintile ‘Investment profiling’scores.
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