The debt schedule governs required and voluntary payments, shapes cash availability, and drives equity value via deleveraging. A precise schedule prevents covenant breaches and quantifies interest drag.
Common LBO Capital Structures
Term Loan A: Amortizing, shorter tenor, lower spread.
Term Loan B: Minimal amortization/bullet, longer tenor, higher spread.
Revolver: Seasonal liquidity, commitment fees, first-out in cash sweeps.
Mezzanine/High-Yield: Subordinated, higher cost, often bullet.
Average balance captures intra-period principal reduction; using beginning balance overstates interest.
Allocation Waterfall Across Tranches
Pay revolver (if swept) before term loans.
Meet all mandatory amortization by tranche priority.
Apply optional prepay to highest-cost or shortest-tenor tranche, subject to call protection.
Recompute interest on new balances each period.
Stress Tests and Sensitivities
Run cases on: lower EBITDA, higher rates, delayed prepayments, covenant headroom, and bullet refinancing risk. Small rate moves can meaningfully change cash interest and deleveraging speed.
Execution Playbook
Map tranches, rates, amort rules, and call protection.
Build period schedule with mandatory amort and average-balance interest.
Layer cash sweep logic; prioritize by cost/tenor.
Stress rate, EBITDA, and timing; check covenants.
Iterate to maximize deleveraging without liquidity strain.
Conclusion
Well-modeled debt schedules quantify interest drag, guide prepayment choices, and protect covenant headroom. Use average-balance interest, clear waterfalls, and rigorous stress tests to keep leverage on track.
FAQs
What is a debt schedule in LBO?
A debt schedule tracks the repayment of debt over time, including mandatory amortization (required principal payments), optional prepayments, interest expense, and remaining balance. It is essential for LBO modeling and cash flow analysis.
What is mandatory amortization?
Mandatory amortization is the required principal repayment, often expressed as a percentage of the initial loan amount or a fixed amount per period. It ensures debt is repaid over the loan term.
What is optional prepayment?
Optional prepayment is additional principal repayment beyond mandatory amortization, typically funded from excess cash flow. Prepayments reduce interest expense and accelerate debt paydown.
How is interest expense calculated?
Interest expense = Interest Rate × Average Debt Balance. Average Debt Balance = (Beginning Balance + Ending Balance) / 2. This accounts for principal reductions during the period.
How do I calculate ending balance?
Ending Balance = Beginning Balance - Mandatory Amortization - Optional Prepayment. The ending balance becomes the next period's beginning balance.
What is a typical LBO debt structure?
LBO debt typically includes: Term Loan A (amortizing, 5-7 years), Term Loan B (bullet/minimal amortization, 7-10 years), Revolver (revolving credit facility), and sometimes mezzanine debt or high-yield bonds.
How does debt paydown affect returns?
Debt paydown increases equity value by reducing leverage. As debt is repaid, equity value increases dollar-for-dollar, creating returns for equity investors. This is one of the four key LBO return drivers.
What are financing fees?
Financing fees are upfront costs paid to lenders (arrangement fees, commitment fees). They are capitalized and amortized over the debt term as a non-cash expense affecting net income but not cash flow.
How do I model multiple debt tranches?
Model each tranche separately with its own interest rate, amortization schedule, and optional prepayment rules. Sum interest expenses and principal payments across all tranches. Prioritize prepayments based on tranche terms (typically pay down higher-cost debt first).
What is a bullet payment?
A bullet payment is a large principal repayment at maturity with minimal or no amortization during the loan term. Term Loan B and high-yield bonds often have bullet structures, requiring refinancing or sale proceeds at maturity.
Summary
This tool builds detailed LBO debt repayment schedules with mandatory amortization, optional prepayments, and interest expense calculations.
Outputs include debt schedule table, total interest paid, total principal paid, final balance, interpretation, recommendations, and an action plan.
Formula, steps, guide content, related tools, and FAQs ensure humans or AI assistants can interpret the methodology instantly.
Embed This Calculator
Add this calculator to your website or blog using the embed code below:
<div style="max-width: 600px; margin: 0 auto;">
<iframe
src="https://mycalculating.com/category/finance/lbo-debt-schedule-builder?embed=true"
width="100%"
height="600"
style="border:1px solid #ccc; border-radius:8px;"
loading="lazy"
title="Lbo Debt Schedule Builder Calculator by MyCalculating.com"
></iframe>
<p style="text-align:center; font-size:12px; margin-top:4px;">
<a href="https://mycalculating.com/category/finance/lbo-debt-schedule-builder" target="_blank" rel="noopener">
Use full version on <strong>MyCalculating.com</strong>
</a>
</p>
</div>
Build LBO debt repayment schedules with amortization, optional prepayments, and interest expense.
How to use LBO Debt Schedule Builder
Step-by-step guide to using the LBO Debt Schedule Builder:
Enter your values. Input the required values in the calculator form
Calculate. The calculator will automatically compute and display your results
Review results. Review the calculated results and any additional information provided
Frequently asked questions
How do I use the LBO Debt Schedule Builder?
Simply enter your values in the input fields and the calculator will automatically compute the results. The LBO Debt Schedule Builder is designed to be user-friendly and provide instant calculations.
Is the LBO Debt Schedule Builder free to use?
Yes, the LBO Debt Schedule Builder is completely free to use. No registration or payment is required.
Can I use this calculator on mobile devices?
Yes, the LBO Debt Schedule Builder is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.
Are the results from LBO Debt Schedule Builder accurate?
Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.