Leveraged Buyout Business Plan

Business Plan Articles

If you are seeking a loan from a bank or private equity firm to acquire a company, it is likely that you will need a business plan. This plan should reflect the historical performance of the company you seek to acquire and how you intend to improve it. This may include additional synergies from the management team, economies of scale, and marketing synergies. This article includes what is included in the LBO business plan and how it should be structured.

leveraged buyout business plan

Leveraged Buyout Business Plan

Building a small web design agency as a freelancer can often be relatively simple, but scaling it outside your local area and on a national level is challenging. You need to establish a strong brand, reputation for managing clients, and have an operations structure that helps you remain profitable as your scale. These unique factors will depend upon your acquisition strategy, synergies, and be reflected in the financial projections that you set forth to achieve. In many cases, acquiring a company at a premium is not profitable in itself. Therefore, clearly communicating the added value that acquiring the company will create is the fundamental objective of the LBO business plan.

Acquisition Strategy

The acquisition strategy of the leveraged buyout business plan is designed to communicate how you will increase the profitability of the company. For instance, some companies target those that have considerable operating efficiencies, whereas others target healthy companies that they can add value through the introduction of synergies. The acquisition strategy of the company demonstrates to the bank that the company will increase its cash flows within the short-term future, in turn, reducing its risk level or increase its profitability.

Synergy Analysis

One of the most important considerations for a leveraged buyout is the value of its synergies either in the supply chain, marketing, or other operating efficiencies. In many cases, jobs can be merged from the acquirer, immediately reducing overhead expenses from payroll reductions. Other areas of synergies include cost reductions from increases in order quantities or synergies in the logistics network. The value of these synergies, along with properly identifying the risk areas, are an important part of the leveraged buyout. Pro Business Plans can help you to determine the value of these synergies and integrate them into the financial projections.

Financial Projections

The financial projections for a leveraged buyout business plan are designed to translate the synergies into financial performance. This should either be reflected by an increase in the company’s growth rate, and improvement in its profit margins, or a reduction in its risk. The projections should clearly outline the justifications to any improvements to the forward looking projections and support it with research, if possible. The most information that your company has available, the more credibility you have when improving the financial situation of the target company. The financial projections should also factor in the cost of debt and amortization schedule, in order to demonstrate that the company can reasonably absorb the risk from a debt placement.

What is Included in Our Custom Leveraged Buyout Business Plan?

  • Marketing Plan
  • SWOT Analysis
  • Competitive Analysis
  • Profitability Analysis
  • Personnel Plan
  • Organizational Chart
  • Company Valuation
  • Executive Summary
  • Company Description
  • Keys to Success
  • Three Year Objectives
  • Product or Service Description
  • Market Research
  • Fundraising Support
  • 12 Month & 3 Year Profit & Loss
  • 3 Year Balance Sheet
  • 12 Month & 3 Year Sales Forecast
  • 12 Month & 3 Year Cash Flows
  • Break-Even Analysis
  • Financial Ratio Analysis
  • Management Team

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