Forum Search: capital markets
Net Debt and Working Capital
Net debt includes all debt - short and long-term less excess cash. The revolver is often an operating line secured by accounts receivable. I have seen analysts calculate net debt as long-term debt net of working capital surplus/deficiency. Is this correct? When I want to use an EBITDA multiple ... Read More
Net debt includes all debt - short and long-term less excess cash. The revolver is often an operating line secured by accounts receivable. I have seen analysts calculate net debt as long-term debt net of working capital surplus/deficiency. Is this correct? When I want to use an EBITDA multiple ... Read More
Correct benchmark for beta
I'm a buy-side equity analyst at a European bank that has an equity portfolio of only euro zone stocks. In my valuation models, namely discounted cash flows, to arrive the WACC of a specific stock I use the Beta of the stock versus a European benchmark (I use Dow Jones Eurostoxx 50 index) with daily... Read More
I'm a buy-side equity analyst at a European bank that has an equity portfolio of only euro zone stocks. In my valuation models, namely discounted cash flows, to arrive the WACC of a specific stock I use the Beta of the stock versus a European benchmark (I use Dow Jones Eurostoxx 50 index) with daily... Read More
RE: Minority Interest in LBO Model
Your question is a great one! Minority Interest treatment is summarized as follows: 1) In standalone valuation context, INCLUDE MI as part of TEV (Total Enterprise Value) because it is considered a form of capital since greater than 50% ownership forces consolidation 2) In credit analysis (... Read More
Your question is a great one! Minority Interest treatment is summarized as follows: 1) In standalone valuation context, INCLUDE MI as part of TEV (Total Enterprise Value) because it is considered a form of capital since greater than 50% ownership forces consolidation 2) In credit analysis (... Read More
RE: 338(h)(10) elections and NOLs
1) Correct. Because I am selling you my stock, it is taxed at my respective individual level. My company isn't physically being touched or doing anything. Just a xfer of ownership. You, the acquiror, of course, will incur goodwill since you are buying my company. 2) A seller is motivated to do a ... Read More
1) Correct. Because I am selling you my stock, it is taxed at my respective individual level. My company isn't physically being touched or doing anything. Just a xfer of ownership. You, the acquiror, of course, will incur goodwill since you are buying my company. 2) A seller is motivated to do a ... Read More
RE: Treatment of Revolver as Debt for TEV
Assuming you are attempting to calculate equity value, there is no debate. Revolver is debt no matter how you slice it and is to be treated as such. Logic in this case: working capital is dollars tied up in the business. If the company is sold, there is usually a working cap requirement. How the... Read More
Assuming you are attempting to calculate equity value, there is no debate. Revolver is debt no matter how you slice it and is to be treated as such. Logic in this case: working capital is dollars tied up in the business. If the company is sold, there is usually a working cap requirement. How the... Read More
RE: Balance Sheet doesn't balance
The most common issue is adding balance sheet items that change and aren't added to the cash flow statement (working capital).
The most common issue is adding balance sheet items that change and aren't added to the cash flow statement (working capital).
RE: Create a simplified model from the full blown core model
Conversion from full blown Core Model to simplified, no debt model: 1) remove all Debt related items from Balance Sheet 2) remove Debt Sweep completely 3) in Cash Flow, CFF, there will be no stock or debt, just have one line called Capital Infusion (like CapEx) and set CFF equal to that. 4) Ch... Read More
Conversion from full blown Core Model to simplified, no debt model: 1) remove all Debt related items from Balance Sheet 2) remove Debt Sweep completely 3) in Cash Flow, CFF, there will be no stock or debt, just have one line called Capital Infusion (like CapEx) and set CFF equal to that. 4) Ch... Read More
RE: Correct Net Debt for TEV
The calculation of Net Debt for valuation purposes is a strict one - total debt - cash + minority interest. Total debt is all forms of interest bearing, negotiated securities, including short term, current portion, long term as well as preferred. Minority interest as well since it is considered ... Read More
The calculation of Net Debt for valuation purposes is a strict one - total debt - cash + minority interest. Total debt is all forms of interest bearing, negotiated securities, including short term, current portion, long term as well as preferred. Minority interest as well since it is considered ... Read More
RE: Tangible Book Value for Insurance Companies
Well the definition of TBV is book less intangibles. Traditionally that obviously doesn't include a prepaid asset like prepaid rent for instance. So don't minus out the DAC. Remember DAC is purely a GAAP term. Note however that a common valuation metric is price / premiums sort of like enterpris... Read More
Well the definition of TBV is book less intangibles. Traditionally that obviously doesn't include a prepaid asset like prepaid rent for instance. So don't minus out the DAC. Remember DAC is purely a GAAP term. Note however that a common valuation metric is price / premiums sort of like enterpris... Read More
When doing a (UK) PtP LBO Model, I have to include in uses of fund the following (what I am quite sure about): Share Price (latest close) % Premium Offer Price per Share All Shares Outstanding Equity Offer Value =+Debt Refinancing =+Pensions =+Transaction Costs =+Tendering Costs =+... When doing a (UK) PtP LBO Model, I have to include in uses of fund the following (what I am quite sure about):
Share Price (latest close)
% Premium
Offer Price per Share
All Shares Outstanding
Equity Offer Value
=+Debt Refinancing
=+Pensions
=+Transaction Costs
=+Tendering Costs
=+EQUITY VALUE MINORITY INTEREST
Total Transaction Value = Total Uses
I have seen that some people also add after Equity Offer Value the Minorities (I did it in capitalized letters) from the target balance sheet? But as they include the minorities in the Total Uses they assume the equity minority interest have to be funded/ refinanced as well. Is that correct and usual/ a reasonable assumption in an LBO?
But maybe I am confusing something here…if you could pls let me know.
Many thanks for your help Read More