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Erudite AfricaCenter of Excellence
← Leveraged Buyout (LBO) Modeling

Stress tests, negotiation and the capstone bid

Module 05 / 5 · 70 min

Stress 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.

In this module you will learn to

  • Design downside scenarios for depreciation, interest rates and EBITDA and read their effect on IRR and covenants
  • Diagnose a covenant breach and choose between cure, waiver, reset and restructuring
  • Compute the maximum price that meets a target IRR in the plan and downside cases
  • Structure vendor finance and earn-outs to bridge a price gap and protect returns
  • Write an investment memo and structuring note that recommend a bid

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.