Private Equity Modeling Course

Lesson 1 • Investment Lifecycle and Deal Flow

Traces a deal from sourcing through exit across all PE stages. Connects lifecycle milestones to the financial outputs modeled in later chapters.

Lesson 2 • Fund Economics and Fee Structures

Explains management fees, carried interest, and hurdle rates as economic incentives. Grounds students in the return-sharing mechanics that PE models must capture.

Lesson 3 • Return Metrics Used in PE

Introduces IRR, MOIC, DPI, and TVPI as the primary performance benchmarks. Provides the measurement vocabulary required throughout the course.

Lesson 1 • Segment and Margin Analysis

Breaks down revenue and cost drivers by business segment to identify margin improvement levers. Segment insights inform the operational value-creation plan modeled later.

Lesson 2 • Capital Structure and Debt Analysis

Reviews existing debt obligations, covenants, and off-balance-sheet items. Prepares students to restructure the balance sheet in an LBO context.

Lesson 3 • Reading Statements for Acquisition Targets

Focuses on identifying quality-of-earnings issues and non-recurring items in target financials. Sets the analytical baseline for all subsequent modeling work.

Lesson 4 • Working Capital and Cash Conversion

Analyzes receivables, payables, and inventory cycles to assess cash generation quality. Working capital assumptions feed directly into free cash flow projections.

Lesson 1 • Comparable Company Analysis

Builds a trading comps table using public market multiples to benchmark target value. Establishes the market-based anchor for the full valuation range.

Lesson 2 • Football Field and Valuation Synthesis

Combines all three methods into a football field chart to communicate the valuation range. Teaches students to reconcile divergent outputs and defend a point estimate.

Lesson 3 • Precedent Transaction Analysis

Analyzes historical deal multiples to capture control premiums and market timing effects. Provides the M&A-based reference point alongside trading comps.

Lesson 1 • Transaction Assumptions and Sources and Uses

Builds the sources-and-uses table that defines entry price, debt tranches, and equity check. This table is the starting point from which all other LBO modules flow.

Lesson 2 • LBO Model Structure and Layout

Establishes the modular architecture of a professional LBO model with clear input, calculation, and output sections. Good structure prevents errors and speeds scenario analysis.

Lesson 3 • Integrated Income Statement and Cash Flow

Links the operating model to the debt schedule to produce a fully integrated P&L and cash flow statement. Integration ensures that debt paydown and interest expense are dynamically consistent.

Lesson 4 • Returns Analysis and Exit Assumptions

Calculates IRR and MOIC at exit under multiple scenarios by varying exit multiple and hold period. Returns analysis is the ultimate output that drives investment decisions.

Lesson 1 • Downside and Stress Testing

Applies revenue shocks and margin compression to test whether the debt structure survives adverse conditions. Stress testing validates the robustness of the capital structure before closing.

Lesson 2 • Debt Capacity and Leverage Metrics

Quantifies maximum debt capacity using leverage multiples, coverage ratios, and cash flow tests. Debt capacity analysis sets the upper bound on financial engineering in any deal.

Lesson 3 • Covenant Analysis and Compliance Modeling

Models maintenance and incurrence covenants to track headroom throughout the hold period. Covenant compliance is a key risk management tool for PE sponsors.

Lesson 1 • Add-On Acquisition Modeling

Integrates bolt-on acquisitions into the platform model including purchase price, synergies, and financing. Add-on strategy is a core PE value-creation tool that requires dedicated modeling.

Lesson 2 • Revenue Growth Modeling

Constructs a bottoms-up revenue model driven by volume, price, and mix assumptions. Revenue is the primary value-creation lever and must be modeled with granular support.

Lesson 3 • Value Creation Attribution Analysis

Decomposes total equity return into EBITDA growth, multiple expansion, and leverage paydown components. Attribution analysis communicates the source of returns to LPs and investment committees.

Lesson 4 • Margin Improvement Initiatives

Models cost reduction, procurement savings, and operational efficiency programs as phased improvements. Margin expansion is the second major lever in PE value creation.

Lesson 1 • Multi-Asset and Platform Roll-Up Models

Builds a consolidated model for a platform company executing multiple add-on acquisitions simultaneously. Roll-up models require dynamic consolidation and synergy tracking across deals.

Lesson 2 • Carve-Out and Corporate Divestiture Models

Adapts the LBO framework for acquiring a business unit separated from a parent company. Carve-outs require standalone cost estimation and stranded cost removal.

Lesson 3 • Management Rollover and Equity Incentives

Models management equity rollover, option pools, and carried interest waterfalls at the portfolio company level. Equity incentive structures affect sponsor returns and must be modeled precisely.

Lesson 4 • Dividend Recapitalization Modeling

Models a mid-hold dividend recap as an incremental debt raise that returns capital to sponsors. Recaps accelerate cash returns and alter the IRR profile without an exit.

Lesson 1 • NAV and Fair Value Estimation

Estimates net asset value for unrealized investments using mark-to-market and income approaches. NAV reporting is required for LP statements and secondary market transactions.

Lesson 2 • LP Reporting and Performance Attribution

Constructs the LP capital account statement and fund-level performance metrics. Accurate reporting builds LP trust and supports fundraising for successor funds.

Lesson 3 • Scenario Analysis and Fund Stress Testing

Applies portfolio-wide stress scenarios to assess fund returns under adverse market conditions. Fund-level stress testing informs risk management and LP communication strategies.

Lesson 4 • Portfolio Construction and Diversification

Models fund-level deployment pace, investment sizing, and sector concentration. Portfolio construction decisions affect fund-level IRR and risk profile.