How do you model a bolt-on acquisition in an existing LBO?
An advanced Private Equity question — expect it in final rounds and case-heavy interviews (IB, PE, Big-4 Transaction Services).
THE SHORT ANSWER
Add to the existing model: (1) new S&U for the bolt-on (often funded from revolver draw + additional equity or FCF). (2) Add bolt-on's revenue and EBITDA from acquisition date. (3) Model integration costs and synergies (phase in over 12-18 months). (4) Update debt schedule for additional borrowing. (5) Recalculate consolidated returns. The key test: does the bolt-on improve or dilute fund returns?
WHAT INTERVIEWERS LISTEN FOR
- ✓Add new sources and uses
- ✓Incorporate bolt-on financials
- ✓Model integration costs and synergies
- ✓Update debt schedule
- ✓Recalculate consolidated returns
COMMON MISTAKES
- ✗Ignoring integration costs
- ✗Assuming synergies are immediate
- ✗Not updating the debt schedule
Reading isn't the same as answering under pressure.
Interviewers don't hand you the model answer — you deliver yours on a clock. Practice this and 1,000+ questions with AI feedback on every answer.
RELATED QUESTIONS
- How do you handle a covenant breach?
- How would you assess a carve-out opportunity for PE?
- When would you use PIK (Payment-in-Kind) debt?
- What's the difference between an equity cure and a capital injection?
- How do PE firms handle underperforming portfolio companies?
- How does a PE fund handle currency risk in cross-border deals?