Re: Stock issued: calculated off Equity Value or EV?
Ok thanks! Sorry i must've missed the caveat in the simple merger model video. But that's what I figured and yes that makes logical sense.

Goodwill and Minority Interest for less than 100%
Hi there, Let's assume the following example: Co.A has acquired 80% of Co.B for $1million in cash, and has incurred $20,000 in merger related costs. Co.B's net assets (100% book value) are $500,000, and for simplicity purposes let's assume fair value equals book value in this case. Co.B has an exis... Hi there,

Let's assume the following example: Co.A has acquired 80% of Co.B for $1million in cash, and has incurred $20,000 in merger related costs. Co.B's net assets (100% book value) are $500,000, and for simplicity purposes let's assume fair value equals book value in this case. Co.B has an existing Goodwill on its balance sheet of $100,000. Assuming we are not taking into account the FAS141R and IFRS#3(R), we would do the following when consolidating in relation to goodwiil and minority interest:
Goodwill = $1,000,000 + $20,000 - [80% * ($500,000 - $100,000)]
Minority interest = ($500,000 - $100,000) * 20% OR $500,000 * 20%? - So, essentially my doubt is: minority interest should be calculated on the same basis as goodwill, which means that we calculate the remaining portion (20%) over the identifiable net assets (net assets less target's existing goodwill) or calculated over the net assets directly (in this case $500,000)?

I tried that on the Complex LBO model and it does not balance if I simply calculate MI with net assets (without subtracting the target's existing goodwill)...
Also, shoud we blow out the target's existing goodwill EVERYTIME or not (I know when it's a 100% acquisition it doesn't matter, but in this case of 80% acquisition it seems that it matters)?

I appreciate your help on this matter.
Thanks in advance.

P.S: I have some of the questions I have posted on the forum over the past weeks in word documents here with me. So, in case you guys still need it just let me know and I can send the files through. Read More

RE: AFM Core Model: Current Portion of LT Debt
Thanks for that. But I'll rephrase my question to make it clearer: by nature, CP is a short-term debt, as you also stressed above, so my point is that there is no sense in including the next year's mandatory repayment of CP in the calculation of the current portion of LT Debt (and that is exactly wh... Thanks for that. But I'll rephrase my question to make it clearer: by nature, CP is a short-term debt, as you also stressed above, so my point is that there is no sense in including the next year's mandatory repayment of CP in the calculation of the current portion of LT Debt (and that is exactly what our formula is doing).

What I'm saying is that, if we forget about our specific case (Wal Mart) and technically speaking, we wouldn't consider that line (28, in the "Debt Sweep" sheet) as part of the current portion of LT Debt calculation.

Did you understand what I'm trying to confirm with you guys now?

Thanks again. Read More

Historical Cash Flow statement
What are the pros/cons with creating a historical CF statement using the historical balance sheet and income statements to calculate instead of plugging in the numbers directly from the financials?

What is considered best practice for historical analysis of the CF statement?

Thanks.

AFM Core Model: Interest Schedule Video
Errata: At approximately 9 minutes into the "Interest Schedule" video explanation within Advanced Financial Modeling - Core Model, the instructor explains the inputs for the "Choose" function, and accidentally says and writes "take the END Tranche balance". This should be corrected to say "AVERAG... Errata: At approximately 9 minutes into the "Interest Schedule" video explanation within Advanced Financial Modeling - Core Model, the instructor explains the inputs for the "Choose" function, and accidentally says and writes "take the END Tranche balance". This should be corrected to say "AVERAGE Tranche" balance instead. Later on in the video, the instructor is correct in saying "make sure you are using the Average balance, not the End balance". One should always use Beginning and Average, never Ending! We apologize for any confusion or inconvenience. Read More