Insights

Building a Balance Sheet for a Startup

Exercises can help provide context for abstract concepts. In this post and the associated YouTube Short we are going to explore the balance sheet by walking through a simple example for a startup. More precisely, we will be launching a banana stand business (because “there’s always money in the banana stand”).

Continue Reading

Value Drivers in an LBO Model

In this post we will use a simple example to highlight the primary value drivers in an LBO model.

Continue Reading

Carried Interest for a $500M Private Equity Fund

How much carried interest would private equity fund managers earn on a $500 million dollar fund that triples in value? In this post we will walk through a basic distribution waterfall to explain how this calculation works.

Continue Reading

Working Capital Adjustment Process

The working capital adjustment requires that the buyer and seller exchange working capital estimates and calculations. In financial models everything is automatic, but in the real world a structured process must be in place. In this article we will explore this sequence.

Continue Reading

Working Capital Peg for a Seasonal Business

How you work towards a normalized level of working capital will vary from one transaction to the next, but the variables that most frequently make this calculation challenging are the company’s rate of growth and exposure to seasonality. To understand why we can explore a business with highly seasonal revenue.

Continue Reading