Buyout of private companies - which Shareholder's Equity components?
Hello. Getting ready for interviews at PE firms and it ocurred to me that, for a public company, it's easy to calculate the buyout of equity portion of the Uses of Funds (#shares vs. offer price), which will typically represent a premium over the current market cap of the company.
If it's a private company, however, we compare the offer value vs. which components of the Shareholder's Equity? We've got (at least): common equity, retained earnings, APIC, treasury stock, accumulated other comprehensive income.
In other words, if I were to buy a company with 0% premium over book value of equity, which line items of the shareholder's equity section of the B/S are considered? Is it simply all of them?
Being as clear a possible: suppose a shareholder's equity section of 100 common stock, 100 preferred stock, 100 retained earnings, 100 APIC and -150 treasury stock. I approach the company and the seller agrees to sell 100% of the company with 0% premium. How much do I pay for the buyout of equity?
Thank you very much.
Components of Shareholder's Equity to consider in a buyout (Originally Posted: 02/13/2017)
Hello. Question I got in an interview with a Top 3 WW PE fund. It was the 1st question of the interview, just to get things started.
Suppose a shareholder's equity section of 100 common stock, 100 preferred stock, 100 retained earnings, 100 APIC and -150 treasury stock. I approach the company and the seller agrees to sell 100% of the company with 0% premium. How much do I pay for the buyout of equity?
Could you guys please help me on that?
Thank you.
delete
Consectetur vero quibusdam at nihil earum voluptas id. Atque rerum quasi neque voluptatem corrupti. Minus animi vel hic. Omnis porro consequatur aut sit illum. Expedita quis eveniet harum inventore qui.
Eius alias quasi hic aliquid cum tempora. Aliquam qui natus repellat exercitationem nisi. Sequi iure quas possimus placeat ut facilis laudantium cumque. Commodi sunt ab doloribus doloremque. Aut velit distinctio natus explicabo nulla omnis dolorem. Hic vel et voluptatem ut fuga quaerat modi eveniet. Minima magni eius placeat optio quo deleniti. Et ut fugit vero.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...