IRR calcs page on LBO Enhanced Model
I have a question re the IRR page. In the 3 separate IRR calcs, we distinguish between equity returns to sponsor, all-in sponsor returns assuming he also holds the mezz/warrants piece, and a separate mezz returns profile for an outside mezz/warrant holder. My questions revolve around proper IRR ... I have a question re the IRR page. In the 3 separate IRR calcs, we
distinguish between equity returns to sponsor, all-in sponsor returns
assuming he also holds the mezz/warrants piece, and a separate mezz
returns profile for an outside mezz/warrant holder. My questions revolve
around proper IRR calcs that capture all cash flows:

1) Shouldn't the first sponsor returns module include a line for any
("special") divs paid out, as is done below for the
sponsor-as-mezz+eq-hldr? Moreover, shouldn't that dividend line be
adjusted downward by multiplying by the % of equity owned by sponsor (assuming he doesn't own 100%)?

2) Shouldn't the sponsor equity+mezz module also adjust the dividends line by multiplying by % of equity owned, even though in this case it's 100%? (The model pulls 100% of the dividends paid out to all the equity holders from the CF stmt.)

3) Now let's assume the outside mezz holder also buys an equity slug, in
addtion to warrants attached to the mezz debt investment. Should I adjust the last IRR module by making it like the 2nd module, i.e., make the total investment = mezz notes+equity invst, then add a line for the warrants ownership? Let's say the direct equity buy is 23% of the equity and the warrants add 5% more when exercised. As above, wouldn't I also need to add a dividend line each year and adjust it for the 23% equity owned outright by the mezz holder? Ergo, the IRR calc for this piece would have to add in each cascading terminal year : Total implied equity value*(23%+5%) + sum(mezz cash int+mezz end bal).

Is this correct thinking? Read More

Is DCF a pre- or post-tax value?
Does the dcf generate a pre or post tax value? Clearly after tax, because you use nopat in the interim years.

But if you use the terminal mutiple approach, you're not tax effecting ebitda, so isn't that apples to oranges, ie when comparing after tax interim fcf vs. Pre tax terminal value?

DCF Valuation Date
Lets say you’re doing a DCF of a target company, to calculate standalone equity value per share by taking DCF EV minus net debt, divide by S/O. Let’s say the latest net debt info you have is as of 12/31/07 10K. But, we’re past 12/31/07. it’s already late February. The transaction would b... Lets say you’re doing a DCF of a target company, to calculate standalone equity value per share by taking DCF EV minus net debt, divide by S/O.
Let’s say the latest net debt info you have is as of 12/31/07 10K.
But, we’re past 12/31/07. it’s already late February. The transaction would be likely to close on 6/30/08.

The question: should we assume a 12/31/07 valuation date in the DCF, because that’s what we have the net debt numbers for, to calculate an implied DCF equity value per share? But 12/31/07 has passed two months ago. OR can we assume a, say 6/30/08 valuation date, discount half of the 2008 cash flows (ie a stub period) to 6/30/08, BUT use the 12/31/07 net debt?

Which is the correct approach? Read More

Excel related question
I am trying to figure out a way to format my entire workbook where hard coded data is in BLACK font and all formulas are in BLUE font. Essentially, for every new worksheet I insert it automatically takes up this formatting. I suppose this would be a macro that is activated the moment I open a new ... I am trying to figure out a way to format my entire workbook where hard coded data is in BLACK font and all formulas are in BLUE font. Essentially, for every new worksheet I insert it automatically takes up this formatting. I suppose this would be a macro that is activated the moment I open a new workbook. Pls advise. Read More

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