Financial Services.
Every deal leaves a paper trail. Graphon answers from your models, calls, filings, memos and more.
Show me ABC Bank’s LBO analyses: the deal, the target IRR and the leverage.
One answer, pulled from the LBO tab of three deal models, the target’s earnings call and the investment committee memo.
answered from 5 of 4,300 workbooks, memos and calls
Project Harbor, Northfield Packaging: 10.5x entry, 5.25x leverage, a 22% target IRR. Project Atlas, Meridian Dental Group: 12.0x entry, 6.0x leverage, 19%. Project Kestrel, Clearwater Software: 14.5x entry, 4.5x leverage, 25%.
On Clearwater’s Q3 call, the CFO guided to roughly 30% EBITDA margin next year, above the 27% the Kestrel model assumes, so its 25% IRR has room to spare.
Against the investment committee’s 20% hurdle and 6.0x cap, two of the three clear the hurdle and all three stay within the cap; Atlas is the one to take back to committee.
| A | B | C | |
|---|---|---|---|
| 1 | |||
| 2 | Northfield Packaging · LBO | ||
| 3 | $ in millions | Base | |
| 4 | |||
| 5 | Entry EV / EBITDA | 10.5x | |
| 6 | Total leverage / EBITDA | 5.25x | |
| 7 | Target IRR | 22% | |
| 8 | MOIC · 5 years | 2.6x |
| A | B | C | |
|---|---|---|---|
| 1 | |||
| 2 | Meridian Dental Group · LBO | ||
| 3 | $ in millions | Base | |
| 4 | |||
| 5 | Entry EV / EBITDA | 12.0x | |
| 6 | Total leverage / EBITDA | 6.0x | |
| 7 | Target IRR | 19% | |
| 8 | MOIC · 5 years | 2.4x |
| A | B | C | |
|---|---|---|---|
| 1 | |||
| 2 | Clearwater Software · LBO | ||
| 3 | $ in millions | Base | |
| 4 | |||
| 5 | Entry EV / EBITDA | 14.5x | |
| 6 | Total leverage / EBITDA | 4.5x | |
| 7 | Target IRR | 25% | |
| 8 | MOIC · 5 years | 3.0x |
Investment committee memo · ABC Bank
Underwriting guidelines
New platform deals are underwritten to a five-year hold.
Target IRR of at least 20%; total leverage no higher than 6.0x EBITDA.
Exceptions return to committee.
Three models, one view.
1 · 2 · 3 · 4 · LBO tabs and the callWhat the CFO said 4 · 28:14
Clearwater Software · Q3 earnings call · 28:14 · CFO, outlook
Transcript
What the committee asks for 4
IC memo · underwriting guidelines
New platform deals are underwritten to a five-year hold. The target IRR must be at least 20%, and total leverage no higher than 6.0x EBITDA. Exceptions return to committee with the sponsor’s case.
Atlas misses the hurdle by a point at the cap, so it goes back to committee.