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Erudite AfricaCenter of Excellence

← Erudite Africa Center of ExcellenceCapital MarketSchool of Investment BankingAdvanced

Leveraged Buyout (LBO) Modeling

Build, stress and negotiate leveraged acquisitions in a market of high birr rates, bank exposure limits and USD debt risk

An advanced course that builds a full LBO model for a fictional Ethiopian dairy processor, then structures, stresses and bids for a family pharmaceutical distributor with local bank debt and DFI mezzanine.

Start the course

0 of 5 modules completed

What you will be able to do

  • Explain what an LBO is, why sponsors use leverage and how value is created
  • Build an LBO model with sources and uses, an operating model, a multi-tranche debt schedule, a cash sweep, exit and returns
  • Interpret IRR and money multiple and their sensitivity to price, leverage and exit
  • Adapt the LBO to Ethiopian conditions: high birr rates, bank exposure limits, offshore USD debt, FX risk and limited leverage
  • Use the model to stress covenants and to negotiate price and structure
For
Investment banking and private equity analysts, associates and deal team members, and bank staff who structure or approve acquisition finance. Prerequisite: Financial Modeling and Valuation (3.a) Level 1 or equivalent spreadsheet modeling skills.
Study time
About 6 hours online, in 5 modules (40 hours in the classroom version)
Each module
Short lessons, animated visuals, Ethiopian examples, decisions to make, the laws and directives that apply and worked calculations, then a quiz
Assessment
A 20-question final exam; pass mark 70%
Certificate
Erudite Africa Center of Excellence certificate of completion
Access
Module 1 free for registered users; the full course, exam and certificate for subscribers

The 5 modules

  1. Module 01Free previewLBO logic, targets and the capital stackWhy sponsors buy companies with borrowed money, what makes a good target, how the layers of debt and equity are arranged, and which Ethiopian rules limit how much leverage a deal can carry.6 lessons · 60 min · quiz
  2. Module 02Building the model: sources and uses to cash sweepBuild Sululta Dairy's LBO model step by step: sources and uses, a nominal birr operating model, free cash flow, a debt schedule with a cash sweep, and the interest circularity that links them.6 lessons · 70 min · quiz
  3. Module 03Exit, returns and advanced debt structuresValue the exit, compute and attribute IRR and MOIC, test their sensitivity, then build the multi-tranche structure of the capstone deal with PIK mezzanine, a revolver, amortization profiles and covenant tests.6 lessons · 70 min · quiz
  4. Module 04Ethiopian structuring and lower-leverage buyoutsAdapt the LBO to Ethiopia: local bank appetite, offshore holding companies, USD debt against birr cash flows, tax and dividend repatriation, foreign investor eligibility, and the minority, family and privatization deals that suit the market.6 lessons · 65 min · quiz
  5. Module 05Stress tests, negotiation and the capstone bidStress the Tena Pharma structure for depreciation, rate and EBITDA shocks, analyze covenant breaches, find the maximum price, use vendor finance and earn-outs to bridge the gap, and write the investment memo that recommends a bid.6 lessons · 70 min · quiz
  6. Officer simulationA buyout deal cycle as acquisition finance associate at Bank A CapitalWork as acquisition finance associate: 11 real-life items, decisions with consequences and a hand-over note. Pass with 70% to qualify for the certificate.
  7. Final examFinal exam and certificate20 applied questions across all 5 modules. Pass with 70% to download your certificate.

Built on

  • Erudite Africa training module: Ethiopian Context, topic 3.b Leveraged Buyout (LBO) Modeling, Levels 1 and 2 (October 2026)
  • NBE Directives SBB/87/2024, SBB/92/2024, SBB/95/2025, NBE/INT/13/2026, FXD/01/2024 and FXD/04/2026, and NBE Monetary Policy Committee release No. 7 (July 2026)
  • Investment Proclamation No. 1180/2020, Investment Regulation No. 474/2020 and Ethiopian Investment Board Directive No. 1082/2025
  • Income Tax Proclamation No. 979/2016 as amended by No. 1395/2025, and Ministry of Finance Transfer Pricing Directive No. 981/2024
  • Ethiopia's Commercial Code and trade competition law, described without article references pending confirmation of the official texts

Examples and companies are fictional. Bank practices are shown as typical Ethiopian practice, not as any one bank's policy. Always apply your own institution's approved policy and the current NBE directives.