Forum Search: capital markets
RE: Merger Modeling Basics: 338(h)10 election
Transactions Fees go to GW directly, "one for one". When calculating GAAP financials, the "GW" calcuation for tax deducts would include Trx Fees. The actual deductibility depends on the country-specific tax laws and even state-specific tax laws, too difficult and more importantly, unnecessary for fi... Read More
Transactions Fees go to GW directly, "one for one". When calculating GAAP financials, the "GW" calcuation for tax deducts would include Trx Fees. The actual deductibility depends on the country-specific tax laws and even state-specific tax laws, too difficult and more importantly, unnecessary for fi... Read More
Valuation
1) Depending on the size and how material the NOLs are, you would value the NOLs separately. Please see other topics Q&A for discussion on NOL treatment for valuation and DCF purposes. 2) ST Debt is always considered debt, regardless of the use of the debt. Please see the topic entitled Treat... Read More
1) Depending on the size and how material the NOLs are, you would value the NOLs separately. Please see other topics Q&A for discussion on NOL treatment for valuation and DCF purposes. 2) ST Debt is always considered debt, regardless of the use of the debt. Please see the topic entitled Treat... Read More
RE: Valuation
Which rate should we use (Cost of Debt or WACC) to discount the unsuded NOLs of the last projected year? With regards to my reference on the interest expense i think i have not explained properly my thought. A company enjoys 2 different tax shields, one arising from the NOLs (hence to be used ... Read More
Which rate should we use (Cost of Debt or WACC) to discount the unsuded NOLs of the last projected year? With regards to my reference on the interest expense i think i have not explained properly my thought. A company enjoys 2 different tax shields, one arising from the NOLs (hence to be used ... Read More
RE: Merger Modeling Basics: Questions on Merger model
Firstly, Thank you for your answers. A few more points on that: (4a). I still don't understand it. It seems to me that the table is the way you physically pay the target (as you also highlighted in the M&A Deal Structuring courses - in which you ask to write below the header "physical currenc... Read More
Firstly, Thank you for your answers. A few more points on that: (4a). I still don't understand it. It seems to me that the table is the way you physically pay the target (as you also highlighted in the M&A Deal Structuring courses - in which you ask to write below the header "physical currenc... Read More
Quick & Dirty Basic LBO Model: About the LBO model
Hi there, In relation to this class, I have a couple of doubts that you may be able to help me with: (1). If we had dividends during the investment period, would we include them when calculating the Multiple of Capital (in that case being [Dividends + Exit Equity Value] / [Equity Injected] )? ... Read More
Hi there, In relation to this class, I have a couple of doubts that you may be able to help me with: (1). If we had dividends during the investment period, would we include them when calculating the Multiple of Capital (in that case being [Dividends + Exit Equity Value] / [Equity Injected] )? ... Read More
RE: Quick & Dirty Basic LBO Model: About the LBO model
1) Yes, if you had dividends in the investment period, you would include in Multiple of Capital as well as triangulate cash flows for IRR. Please refer to our Complex LBO Modeling class where this is covered. 2) Correct, however, since we are not calculating Goodwill here, you need to incorporat... Read More
1) Yes, if you had dividends in the investment period, you would include in Multiple of Capital as well as triangulate cash flows for IRR. Please refer to our Complex LBO Modeling class where this is covered. 2) Correct, however, since we are not calculating Goodwill here, you need to incorporat... Read More
RE: Leveraged Buyout Overview: About LBO Overview
1) Goodwill is usually created upon a change of control. For a greater than 50% stake but less than 100%, minority interest is created. So you model out the BS combination as if you own 100% of the target and then create minority interest which is essentially a pro-rata of the book value that is own... Read More
1) Goodwill is usually created upon a change of control. For a greater than 50% stake but less than 100%, minority interest is created. So you model out the BS combination as if you own 100% of the target and then create minority interest which is essentially a pro-rata of the book value that is own... Read More
We based the 6.0x capacity on currrent year not previous year! Since previous year usually has lower EBITDA, of course the ratio is higher!
WACC of a private company?
In this case, you should estimate the ideal target capital structure of your firm, primarily based on an average or "run-rate" capital structure based on comps. Many private companies have little to no debt so the WACC somtimes is the cost of equity in your calcuation. For a "normalized" WACC you ca... Read More
In this case, you should estimate the ideal target capital structure of your firm, primarily based on an average or "run-rate" capital structure based on comps. Many private companies have little to no debt so the WACC somtimes is the cost of equity in your calcuation. For a "normalized" WACC you ca... Read More
Valuation of fair market value of debt converting to equity
Question.... How do you fair maket value debt that is converting to equity post a bankruptcy? Meaning, the senior lenders are goign to have all of the equity post restructuring and you're trying to figure out the value of the equity day 1 of chapter 11 emergence... Here's what I know so far.. (... Read More
Question.... How do you fair maket value debt that is converting to equity post a bankruptcy? Meaning, the senior lenders are goign to have all of the equity post restructuring and you're trying to figure out the value of the equity day 1 of chapter 11 emergence... Here's what I know so far.. (... Read More
Hi, I have a couple of questions in relation to this module that I will need your assistance to understand: (1). I'm confused with the GW calculation. In our "Accretion Dilution Model" we did it one way (P. price - book value). While in this module, we did: P. price - book value + transaction fee... Hi, I have a couple of questions in relation to this module that I will need your assistance to understand:
(1). I'm confused with the GW calculation. In our "Accretion Dilution Model" we did it one way (P. price - book value). While in this module, we did: P. price - book value + transaction fees. Which one should I use? And why did you guys use it differently in each module?
(2). Why did we completely disconsider the target Book value when calculating the Pro Forma Shareholder's Equity? Does it have to do with the way we are funding the deal (debt vs. equity) or not?
(3). When we are linking the Enterprise Value with the %age of cash / equity in the deal structure, we are assuming that the target debt is being refinanced 1/2 by a new debt and retired by 1/2 equity raised. But how it happens if in the previous post in this forum, WST answered that you cannot pay your transaction fees in equity, as it is a cash coming out. So, the same concept applies here: considering that %age relates to the physical currency you pay, how can one retire the debt with shares (whereas you should be doing that with cash - in physical currency)?
(4). That percentage table (of %cash / %equity) relates to how you pay the target (physically speaking) or how you fund the transaction as a whole (raising debt and equity in the markets, and them using the proceeds to pay the purchase price, refinance target debt and pay for transaction fees)?
(5). Shouldn't we simply link the %cash / %equity to the purchase price (them assuming it is the way I'm paying the target in physical terms) and them include another line below "Stock issued" saying "Refinanced Target debt" in which we will assume we drawdown a new debt, pay off target's existing debt? Meaning that we refinance debt entirely w/ another debt (of course w/ better terms & rates), and not splitting the refinanced debt in equity and debt.
I appreciate your help in each of those questions.
Rgds. Read More