LBO Model Template
A leveraged buyout (LBO) model — sources and uses, operating model, debt schedule, exit waterfall, and returns — typed, compiled, and live.
Drag the entry multiple. Watch the equity check, IRR, and MoIC update instantly. Change the exit multiple in the Conservative scenario. See where your returns go underwater. Then fork it in the Workshop and use it on your deal.
This is not a spreadsheet download. It is a compiled model with typed assumptions, an explicit dependency graph, assertions that catch bad capital structures, and a signed receipt on every compile.
Inputs · typed assumptions
Outputs · compiled in topological order
Assertions · guardrails
How to read it
Walk through the four stages visible in the model:
- Sources & Uses — the entry transaction: enterprise value, debt raised, equity check, and fees. The balanced-sources assertion checks that sources equal uses. Always.
- Operating Model — three years of revenue, EBITDA, and free cash flow, each driven by typed assumptions.
- Debt Schedule — interest expense, mandatory amortization, and the cash sweep that pays down debt from excess free cash flow.
- Exit Waterfall — exit enterprise value (exit multiple × exit EBITDA), less net debt at exit, equals equity proceeds. That is the returns math: MoIC and an approximate IRR.
The key leverage point: changing the entry multiple changes both the total enterprise value (and therefore the debt quantum) and the equity check. Change the exit multiple and the returns flip. These are the two levers PE associates spend most of their time on. Here they're typed, labeled, and their downstream effects are traced explicitly.
The LBO mechanic
An LBO is simple in outline and unforgiving in detail. You buy a business with mostly debt, operate it for three to five years, pay down that debt with the company's cash flows, and sell it at the end. Because the equity is a thin slice of the entry check, modest improvements in enterprise value translate into large equity returns. Leverage amplifies the outcome in both directions.
Three drivers produce the return: multiple expansion (you exit at a higher multiple than you entered), earnings growth (EBITDA grows during the hold), and debt paydown (every dollar of debt repaid is a dollar more of equity at exit). A good LBO model lets you see how much of the return comes from each — and how fragile the thesis is if one of them reverses.
Why the model must be integrated: changing the EBITDA margin changes free cash flow (operating model), which changes how fast the cash sweep retires debt (debt schedule), which changes net debt at exit (exit waterfall), which changes equity proceeds (returns). That is the same dependency-chain problem as the three-statement model, applied to a deal structure. In Excel you wire it by hand across tabs and hope nothing snaps. In a typed compiled model the chain is declared and the engine evaluates it in order, the same way every time, with the sources-equal-uses and leverage-ceiling assertions standing guard.
Fork and own it
When you fork: your assumptions, your deal parameters, your compile. A file on your machine that Flatland doesn't hold. Run scenario overlays for your LP meeting. Export to Excel for your advisor. Or hand it to your AI agent to run the sensitivity automatically.
The first 50 compiles are on us. Install Flatland — or start from the three-statement model preset.