The Economics of Leveraged Buyouts

My thesis is divided into two parts. The first part examines the economics of leveraged buyouts. I describe the three potential sources of return from leveraged buyouts: changes in the capital structure, operational improvements and multiple expansion. The second part of my thesis pitches a leveraged buyout of Nautilus Inc. It includes screening of target companies using both quantitative and qualitative factors, ultimately identifying Nautilus Inc as a suitable target. I examine Nautilus' business, its competitors and market potential. I build a financial model of the leveraged buyout including operating assumptions, pro-forma financial statements, a sources and uses table, debt pay-down schedule, and sensitivity table analysis.