Free Cash Flow Yield Private Equity. It takes into account growth and cost assumptions, working capital requirements and a firm’s capital structure in its analysis. Free cash flow to equity is the total amount of cash available to the investors;
Get the most detailed and comprehensive private equity data. Get the most detailed and comprehensive private equity data. General assumptions acquisition timing assumptions waterfall hurdle rate assumptions operating assumptions returns summary total capital commitment $95,000,000 fund quarter hold period lp preferred return (annual compounding) 8.00% acquisition fee (% of equity) 1.00%
(this is a standard assumption for a basic lbo model.) $5 mm year 1 fcf + $5 mm year 2 fcf + $7 mm year 3 fcf + $8 mm year 4 fcf + $9 mm year 5 fcf = $34 mm cumulative fcf.
The model can be used as a template by any private equity firm raising funds and looking at portfolio investments. Private equity and investment bankers do not build separate financial models for each deal. To calculate the free cash flow yield of a stock, you need to know how much it would cost you to buy the entire company right now (market capitalization); Fcf yield is also known as free cash flow per share.
