SaaS LBO Model: NovaSaaS Inc.

Author: Alessandro Radice · M.Sc. Economics and Business Law (Finance), Università Cattolica del Sacro Cuore, Milan

Can a sponsor pay 18.5x for a SaaS business and still clear its hurdles without a richer exit? A leveraged buyout of NovaSaaS Inc., a fictional B2B SaaS platform in workflow automation, built as a buy-side private equity case. It includes a 7-tab Excel model with live formulas, an investment memorandum and a presentation deck.

---

Objective

A private equity investment committee asks three questions about every buyout: how is the deal financed, where do the returns come from, and what happens if the plan goes wrong?

This project has three goals:

1. Model the full buyout. Sources & uses, a three-tranche debt package, five-year operating projections, a debt schedule with cash sweep and PIK accretion, exit and returns.
2. Underwrite conservatively. The exit multiple is set 3.5 turns below entry, so returns must come from EBITDA growth and deleveraging, not multiple expansion.
3. Go beyond gross returns. Net LP returns after an 8% preferred return, full GP catch-up and 20% carried interest, plus a management rollover and scenario analysis.

---

Transaction at a glance

Entry enterprise value	$485m (18.5x LTM EBITDA of $26.2m)
Debt package	$266.6m, 55% of EV, 10.2x EBITDA
Sponsor equity	$220.5m, plus $14.5m management rollover
Hold period	5 years
Exit multiple	15.0x (3.5 turns below entry)

Tranche	Amount	x EBITDA	Rate	Structure
Term Loan B	$169.6m	6.5x	SOFR + 350 (8.8%)	1% amortisation + 100% excess cash sweep
Unitranche / 2nd lien	$72.7m	2.8x	8.5% fixed	Bullet, repaid at exit
PIK toggle notes	$24.2m	0.9x	8.5% PIK	Accretes to principal

---

Key results

Scenario	Revenue CAGR	Exit multiple	Gross IRR	Net IRR	MoM
Upside	22%	16.0x	34.3%	29.9%	4.4x
Base case	~16%	15.0x	24.0%	20.5%	2.9x
Downside	~11%	13.0x	11.1%	9.3%	1.7x

• EBITDA grows from $26.2m to $58.3m and net leverage falls from 10.2x to 3.2x.
• The base case clears the fund hurdles (20% IRR, 2.5x MoM) while assuming multiple compression; the downside still returns 1.7x and preserves capital.
• Of $645.9m of sponsor proceeds, $85.1m goes to the GP through catch-up and carry.

---

What's in the repository

File	What it is
NovaSaaS_LBO_Model.xlsx	Excel model, 7 tabs, 356 formulas
NovaSaaS_LBO_Memo.pdf	Investment memorandum: thesis, structure, projections, returns waterfall, sensitivity, risks and mitigants
NovaSaaS_LBO_Deck.pdf	Five-slide presentation of the deal
*.png	Slides used in this README

The Excel model

Cover · Assumptions · Income Stmt · Debt Schedule · FCF · Returns · Sensitivity

• Scenario switch: one cell on Assumptions (1 = Downside, 2 = Base, 3 = Upside) changes the growth path and exit multiple across the whole model.
• Debt schedule: interest on opening balances, TLB mandatory amortisation plus a 100% excess-cash-flow sweep, unitranche bullet, PIK accretion at 8.5%.
• Returns: exit equity, gross IRR and MoM, and a full LP/GP distribution waterfall with net IRR and net MoM.
• Sensitivity: gross IRR across entry and exit multiples; the base case ties exactly to the Returns tab.

---

Methodology

• Operating case: revenue growth decelerating from 22% to 11%, EBITDA margin expanding from 54.5% to 57.5%, D&A 3% and CapEx 2.5% of revenue, cash taxes at 25% on positive EBT only.
• Rates: SOFR modelled at 5.3%, deliberately above current levels, so the floating leg is conservative.
• Waterfall: return of capital, 8% compounded preferred return, full GP catch-up, then an 80/20 split. Net IRR comes from LP cash flows, not a flat haircut to gross.
• Validation: the three scenarios were rebuilt in an independent Python engine; the base case ties to the Excel on EBITDA, net debt, exit equity, MoM and IRR.

Limitations

• NovaSaaS is fictional and all figures are hypothetical.
• Annual model with no quarterly covenant testing.
• The 10% management incentive pool on gains is excluded from sponsor returns.
• Exit assumed at the end of year 5 through a sale; no dividend recap or IPO scenario.

This project is for educational purposes and is not investment advice.

---

How to use it

1. Download NovaSaaS_LBO_Model.xlsx and open it in Microsoft Excel or Google Sheets.
2. On Assumptions, change the scenario cell to 1, 2 or 3, or edit the entry multiple, leverage, rates or growth path. Every tab recalculates.
3. Read NovaSaaS_LBO_Memo.pdf for the investment case.

Tools

Excel · LBO modeling · Debt schedule · Distribution waterfall