Noncontrolling Interest in LBO
Hi all,
Assuming a sponsor acquires a company with substantial noncontrolling interest reflected in its consolidated financials, how do you calculate the cash flow available for debt service? If you take EBIT(1-t) + D&A then subtract capex, aren't you still including the cash flow attributable to the minority interest in subsidiaries? Wouldn't you need to subtract this out? If so, what's the best approach for doing this?
Thank you
You would have to figure out what the realistic cash flow would be to the borrowing entity.
You are - but unless you have more detail or a solidly based assumption, it's really hard to tease out how much cash flow is at play. Unless you're doing diligence (and even then...) you probably wont get your hands on all the subsidiary financials, etc.
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