LBO Model for DELL (Ticker: DELL)

Circularity
FY ending on
Latest 10Q available as of

1
28-Feb-13
3-May-13

Enterprise Value Calculation

Acquisition date
Share price ($)
Premium paid
Acquisition share price($)
Basic shares outstanding (millions)
Dilutive Securities
Options
Options (mm)
24
35
17
27
17
Restricted Stock Units
RSUs outstanding (mm)

what is this for?

6-Sep-13
13.8
20%
16.6
1,756.1

Exercise Price ($) Dilutive effect

6.6
14.5
15.5
2.2
25.2
0.0
34.3
0.0
40.2
0.0
42

Diluted shares (mm)

Acquisition equity value
Exisiting Debt
Cash and cash equivalents
Acquisition Enterprise Value
EBITDA (LTM)
EBITDA multiple (LTM)

1,814.8
30,096.3
7,248.0
10,905.0
26,439.3
4,504.0
5.9 x

Assumptions
Exit year
Exit EBITDA multiple
Financing fees as a % to Debt raised
Advisory fees % of Enterprise Value
% of existing debt retired
Int exp. on Senior Debt
Int exp. on Sub. Debt

4.0
5.9 x
2.0%
1.5%
100.0%
5.0%
7.5%

how do we assume these?

Sources and Uses of Funds

Uses
Acquisition Equity Value
Debt Retired
Minimum Cash
Financing Fees
Advisory Fees
Total

Sources
Existing Cash
Senior debt
Sub. Debt
Total Debt
Sponsor Equity
Total

30,096.3
7,248.0
2,000.0
145.0
396.6
39,885.9
2012

2013

10,905.0
12,000.0
8,000.0
20,000.0
8,980.9
39,885.9

2014E

2015E

12,000.0
(1,031.1)
10,968.9
574.2

10,968.9
(1,572.5)
9,396.4
509.1

Debt Schedule
Senior Debt
Beginning Balance
Repayment
Ending Balance
Interest Expense
Subordinated debt

12,000.0

Beginning Balance
Repayment
Ending Balance
Interest Expense

8,000.0

2012

2013

62,071.0
4,431.0
0.31%
(191.0)
4,240.0
17.6%
1.2%
(748.0)

56,940.0
3,973.0
0.30%
(171.0)
2,841.0
16.5%
0.8%
(469.0)

-42.9%
6,476.0
3,327.0
1,404.0
3,423.0
14,630.0
(11,656.0)
(7,478.0)
(19,134.0)
(26,612.0)
20.9%
12,961.0
11.6%
7,228.0
-1.1%
(675.0)

-48.5%
6,629.0
3,213.0
1,382.0
3,967.0
15,191.0
(11,579.0)
(8,017.0)
(19,596.0)
(27,613.0)
30.6%
17,446.0
14.3%
8,158.0
-0.9%
(513.0)

2012

2013

8,000.0
0.0
8,000.0
1,200.0
2014E

8,000.0
0.0
8,000.0
600.0
2015E

Income Statement items

Revenues
EBIT
Int exp. As % of Revenue
Int.exp., net
EBT
Tax rate
Tax expense as a % of Revenue
Tax expense
Dividends paid
Shares issuance/ (repurchases)
Balance Sheet items
Operating WC as a % of Revenues
Accounts receivable
Short-term financing receivables
Inventories
Other current assets
Total Current Assets
Accounts payable
Other current liabilities
Total Current Liabilities
Op. Working Capital
Other long term assets as a % of Revenues
Other long term assets
Other long term liabilities as a % of Revenues
Other long term liabilties
Capex as % of revenues
Capex

Cashflow Statement
EBITDA
Less: Int exp. (Senior Debt)
Less: Int exp. (Sub. Debt)
Total Interest expense
Tax expense
(Inc)/ Dec in Operating Working Capital
(Inc)/ Dec in other long term assets
Inc/ (Dec) in other long term liabilities
Less: Capex
Less: Dividends paid
Share issuances/(repurchases)
FCF

4,504.0

(191.0)
(748.0)

(171.0)
(469.0)
1,001.0
(4,485.0)
930.0
(513.0)

Repayment of Senior Debt

Repayment of Subordinated debt
Net cash flow
Cash balance

2,000.0
2012

Returns to Equity holders

2013
0

57,111.4
2,407.0

57,183.5
2,621.8

(173.6)
2,233.4

(173.8)
2,448.0

(381.3)
0.0
0.0

(418.0)
0.0
0.0

(26,090.9)

(26,123.8)

14,712.0

14,730.5

7,416.5

7,425.9

(567.8)

(568.5)

2014E

2015E

3,482.0
(574.2)
(1,200.0)
(1,774.2)
(579.3)
(1,522.1)
2,734.0
(741.5)
(567.8)
0.0
0.0
1,031.1

3,806.5
(509.1)
(600.0)
(1,109.1)
(580.1)
32.9
(18.6)
9.4
(568.5)
0.0
0.0
1,572.5

(1,031.1)
0.0
0.0

(1,572.5)
0.0
0.0

2,000.0

2,000.0

2014E
1

2015E
2

Enterprise Value on exit

Senior Debt on exit
Subordinated Debt on exit
Total debt on exit
Cash on exit
Equity Value on exit
Cash flow to equity holders
IRR (%)

(8,980.9)
9%

20,440.0
10,968.9
8,000.0
18,968.9
2,000.0
3,471.1

22,344.9
9,396.4
8,000.0
17,396.4
2,000.0
6,948.5

0.0

0.0

25%
Reverse Engineering (To resolve at actual premium paid for desired IRR)
Target IRR (%)
20%
Exit Multiple
5.9 x
Exit in years
4.0
Exit EBITDA
4,306.3
EV
25,278.8
Net Debt
12,809.2
Equity at exit
12,469.6
Implied Equity at beginning
6,013.5
Total debt (raised)
20,000.0
Cash
10,905.0
Total Sources
36,918.5 39885.89943
Minimum cash
2,000.0
Fees
541.6
Retired
7,248.0
Equity (Target should have been valued for desired
27,129.0
IRR)
Implied Price
14.9
Current share price
13.8
Premium to current
8.2%
Sensitivity Analysis

Exit Multiple EV/EBITDA

Entry EBITDA multiple

Stock Price ($)

Premium
9%

4.9 x

5.4 x

5.8 x

16.3

18%

-1%

5%

5.8 x

16.4

19%

-2%

4%

5.9 x

16.6

20%

-2%

4%

5.9 x

16.7

21%

-3%

3%

6.0 x

16.9

22%

-4%

2%

hat is this for?

how is this allocation done intially?

2016E

2017E

9,396.4
(515.9)
8,880.5
456.9

8,880.5
(2,071.3)
6,809.2
392.2

8,000.0
0.0
8,000.0
600.0
2016E
52,492.9
2,920.9

8,000.0
0.0
8,000.0
600.0
2017E
51,883.1
3,528.1

(159.6)
2,761.3

(157.7)
3,370.4

(471.5)
0.0
0.0

(575.5)
0.0
0.0

(23,981.0)

(23,702.4)

13,522.2

13,365.1

6,816.8

6,737.6

(521.9)

(515.8)

2016E

2017E

4,170.9
(456.9)
(600.0)
(1,056.9)
(532.5)
(2,142.9)
1,208.3
(609.1)
(521.9)
0.0
0.0
515.9

4,306.3
(392.2)
(600.0)
(992.2)
(526.3)
(278.6)
157.1
(79.2)
(515.8)
0.0
0.0
2,071.3

(515.9)
0.0
0.0

(2,071.3)
0.0
0.0

2,000.0
2016E
3

2,000.0
2017E
4

why doesnt this interest expense include interest from the debt schedule?

operating WC is ac recievable and inventory - ac payable?

why is this tax expense on revenue and not on EBT?

24,484.0
8,880.5
8,000.0
16,880.5
2,000.0
9,603.5

25,278.8
6,809.2
8,000.0
14,809.2
2,000.0
12,469.6

0.0

12,469.6

Exit Multiple EV/EBITDA(LTM)

5.9 x

6.4 x

6.9 x

10%

15%

19%

9%

14%

18%

9%

13%

17%

8%

12%

16%

7%

11%

15%

from the debt schedule?

LBO Model for YUCHAI (Ticker: CYI)

Circularity
FY ending on
Latest 10F available as of

1
31-Dec-12
31-Dec-12

Enterprise Value Calculation

Acquisition date
Share price ($)
Premium paid
Acquisition share price($)
Basic shares outstanding (millions)
Dilutive Securities
Options
Options (mm)

6-Nov-13
153.4
20%
184.1
37.27

Exercise Price ($)

0
0
0
0
0

Restricted Stock Units

RSUs outstanding (mm)

0
0
0
0
0.0

Dilutive effect
0.0
0.0
0.0
0.0
0.0

Diluted shares (mm)

Acquisition equity value
Exisiting Debt
Minority Interest
Cash and cash equivalents
Acquisition Enterprise Value
EBITDA (LTM)
EBITDA multiple (LTM)

37.3
6,860.9
2,450.70
204.00
3,157.00
6,154.6
1,511.9
4.1 x

Assumptions
Exit year
Exit EBITDA multiple
Financing fees as a % to Debt raised
Advisory fees % of Enterprise Value
% of existing debt retired
Int exp. on Senior Debt
Int exp. on Sub. Debt

6.0
4.1 x
2.0%
1.5%
100.0%
6.0%
7.5%

Sources and Uses of Funds

Uses
Acquisition Equity Value
Debt Retired
Minimum Cash
Financing Fees
Advisory Fees
Total

Sources
Existing Cash
Senior debt
Sub. Debt
Total Debt
Sponsor Equity
Total

6,860.9
2,450.7
3,000.0
49.0
92.3
12,452.9
2011

2012

3,157.0
6,000.0
3,000.0
9,000.0
295.9
12,452.9

2013E

2014E

6,000.0
(1,096.6)
4,903.4
327.1

4,903.4
(1,154.7)
3,748.7
259.6

Debt Schedule
Senior Debt
Beginning Balance
Repayment
Ending Balance
Interest Expense

6,000.0

Subordinated debt
Beginning Balance
Repayment
Ending Balance
Interest Expense

3,000.0

2011

2012

15,444.4
1,535.1
1.01%
(156.2)
1,299.3
17.5%
1.5%
(226.8)

13,449.5
1,163.5
1.58%
(213.0)
913.6
15.6%
1.1%
(142.2)

Balance Sheet items

Operating WC as a % of Revenues
15.1%
Inventories
2416.06
Trade and bills recievables
6690.92
Prepayments
100.86
Other recievables
466.07
Income tax recooverable
0.00
Prepaid operating leases
11.29
Other current assets
96.22
Total Current Assets
9,781.4
Trade payables
7,234.2
Interest-bearing loans and borrowings
3,551.8
Provision for taxation
142.8
Other current liabilities
0.0
Provision for product warranty
307.1
Total Current Liabilities
11,235.8
Op. Working Capital
2,338.9
Other long term assets as a % of Revenues
34.0%
Other long term assets
5,244.8
Other long term liabilities as a % of Revenues
3.7%
Other long term liabilties
565.0
Capex as % of revenues
4.3%
Capex
657.1

14.3%
2010.76
6591.74
53.73
243.33
0.00
12.61
341.79
9,254.0
6,921.2
2,339.3
57.8
9.5
268.0
9,595.8
1,924.6
40.5%
5,443.2
4.1%
556.0
4.6%
616.0

2011

2012

3,000.0
0.0
3,000.0
450.0
2013E

3,000.0
0.0
3,000.0
225.0
2014E

Income Statement items

Revenues
EBIT
Int exp. As % of Revenue
Int.exp., net
EBT
Tax rate
Tax expense as a % of Revenue
Tax expense
Dividends paid
Shares issuance/ (repurchases)

Cashflow Statement
EBITDA
Less: Int exp. (Senior Debt)
Less: Int exp. (Sub. Debt)
Total Interest expense
Tax expense
(Inc)/ Dec in Operating Working Capital
(Inc)/ Dec in other long term assets
Inc/ (Dec) in other long term liabilities
Less: Capex
Less: Dividends paid
Share issuances/(repurchases)
FCF
Repayment of Senior Debt
Repayment of Subordinated debt

1863.931

(156.2)
(226.8)

1,511.9

(213.0)
(142.2)
414.3
(198.4)
(9.0)
616.0

14,511.5
1,269.6

15,671.6
1,371.1

(777.1)
492.5

(484.6)
886.6

(81.3)
0.0
0.0

(146.4)
0.0
0.0

2,137.1

2,308.0

5,400.5

5,832.3

565.4

610.6

641.0

692.3

2013E

2014E

1,576.3
(327.1)
(450.0)
(777.1)
(183.3)
(212.5)
42.7
9.4
641.0
0.0
0.0
1,096.6

1,702.3
(259.6)
(225.0)
(484.6)
(197.9)
(170.9)
(431.8)
45.2
692.3
0.0
0.0
1,154.7

(1,096.6)
0.0

(1,154.7)
0.0

Net cash flow

Cash balance

3,000.0
2011

Returns to Equity holders

Enterprise Value on exit
Senior Debt on exit
Subordinated Debt on exit
Total debt on exit
Cash on exit
Equity Value on exit
Cash flow to equity holders
IRR (%)

2012
0

(295.9)
87%

0.0

0.0

3,000.0

3,000.0

2013E
1
6,416.5
4,903.4
3,000.0
7,903.4
3,000.0
1,513.1

2014E
2
6,929.5
3,748.7
3,000.0
6,748.7
3,000.0
3,180.8

0.0

0.0

25%
Reverse Engineering (To resolve at actual premium paid for desired IRR)
Target IRR (%)
20%
Exit Multiple
4.1 x
Exit in years
6.0
Exit EBITDA
1,985.4
EV
8,081.7
Net Debt
796.1
Equity at exit
7,285.6
Implied Equity at beginning
2,439.9
Total debt (raised)
9,000.0
Cash
3,157.0
Total Sources
14,596.9 39885.89943
Minimum cash
3,000.0
Fees
141.3
Retired
2,450.7
Equity (Target should have been valued for desired
9,004.9
IRR)
Implied Price
241.6
Current share price
153.4
Premium to current
57.5%
Sensitivity Analysis

Exit Multiple EV/EBITDA

Entry EBITDA multiple

Stock Price ($)

Premium
87%

4.9 x

5.4 x

#REF!

181.0

18%

108%

111%

#REF!

182.6

19%

98%

101%

#REF!

184.1

20%

91%

94%

#REF!

185.6

21%

86%

88%

#REF!

187.2

22%

81%

83%

2015E

2016E

2017E

3,748.7
(1,361.2)
2,387.5
184.1

2,387.5
(1,591.4)
796.1
95.5

796.1
(796.1)
0.0
23.9

2018E

0.0
0.0
0.0
0.0

3,000.0
0.0
3,000.0
225.0
2015E
16,924.5
1,480.7

3,000.0
0.0
3,000.0
225.0
2016E
18,277.6
1,599.1

3,000.0
(1,059.5)
1,940.5
185.3

1,940.5
(1,940.5)
0.0
72.8

2017E

2018E

19738.79 21316.829
1726.9604 1865.0241

(409.1)
1,071.7

(320.5)
1,278.6

(209.2)
1,517.8

(72.8)
1,792.3

(176.9)
0.0
0.0

(211.1)
0.0
0.0

(250.6)

(295.9)

2,492.5

2,691.7

2,906.9

3,139.3

6,298.5

6,802.1

7,345.9

7,933.2

659.4

712.2

769.1

830.6

747.6

807.4

872.0

941.7

2015E

2016E

2017E

2018E

1,838.4
(184.1)
(225.0)
(409.1)
(213.8)
(184.5)
(466.3)
48.8
747.6
0.0
0.0
1,361.2

1,985.4
(95.5)
(225.0)
(320.5)
(230.8)
(199.3)
(503.5)
52.7
807.4
0.0
0.0
1,591.4

(1,361.2)
0.0

(1,591.4)
0.0

what all to include?

which long term assets and liabilities have to be included?

2144.098 2315.5102
(23.9)
0.0
(185.3)
(72.8)
(209.2)
(72.8)
(249.3)
(269.2)
(215.2)
(232.4)
(543.8)
(587.3)
56.9
61.5
872.0
941.7

1,855.6

2,157.0

(796.1)
(1,059.5)

0.0
(1,940.5)

calculated capex as diff betweenPurchase of property, plant and equ

Proceeds from disposal of property, plant and e

0.0

0.0

0.0

216.5

3,000.0

3,000.0

3,000.0

3,216.5

2015E
3
7,483.5
2,387.5
3,000.0
5,387.5
3,000.0
5,096.0

2016E
4
8,081.7
796.1
3,000.0
3,796.1
3,000.0
7,285.6

2017E
5
8,727.9
0.0
1,940.5
1,940.5
3,000.0
9,787.3

2018E
6
9,425.6
0.0
0.0
0.0
3,216.5
12,642.1

0.0

0.0

0.0

Exit Multiple EV/EBITDA(LTM)

5.9 x

6.4 x

6.9 x

113%

115%

118%

103%

106%

108%

96%

98%

100%

90%

92%

94%

86%

88%

90%

12,642.1

have to be included?

Purchase of property, plant and equipment

om disposal of property, plant and equipment