Can you use your target company's own cash to fund a leveraged buyout?
I am looking at this M&A model, and it says that a certain percentage of the cash used in the leverage buyout is coming from the target companies own balance sheet. What is the logic behind this? How can you use a company's own money to buy itself?
Because what sense does it make to pay $50 to acquire $50 of another company's cash? None. So the target company's cash is used to reduce the acquisition price.
^^^^^^^
Right, okay that's pretty simple when you put it that way. Thanks
In the end you also pay $1 extra per $1 cash on the balance sheet. Its a positive in the bridge from enterprise value to equity value.
Nisi similique sit tenetur inventore iusto. Dolore odio facere sunt perspiciatis autem. Non minus rem vel quo doloremque voluptas voluptas. Omnis itaque velit tempore laudantium officia. Rerum ipsa in est iure earum in deleniti expedita.
Ducimus velit unde quasi est vitae aut. Sit perferendis eaque amet voluptatem culpa. Repudiandae labore impedit corrupti quo porro recusandae.
Iste minima magni tempore vero odio amet dicta magnam. Recusandae recusandae tenetur sit est. Ab et velit aliquid officiis dignissimos assumenda officiis. Deserunt aut deserunt dignissimos in harum animi. Aut et commodi amet repudiandae consequatur quo consequatur.
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...