Hi All,
I am creating a DCF and had a relatively basic question. The Company plans to acquire another company in the forecast period and will raise an equivalent amount of debt to finance the transaction. Is this a wash? Should I increase CapEx by the amount of the acquisition, or not since it will be debt financed?
Thank you!
| +465 | Don’t work at UBS - UBS Sucks | 50 | 2h |
| +228 | Should My Intern Get a Return Offer? | 58 | 2d |
| +85 | UBS Accused of Favoring H-1B Workers While Cutting U.S.-Born Employees | 12 | 2h |
| +75 | Incompetent and annoying co-intern | 23 | 5h |
| +67 | Getting Laid in IB? | 28 | 2d |
| +66 | Intern keeps sleeping at work - what to tell them | 28 | 8h |
| +55 | Living in greenwich as an analyst? | 12 | 5h |
| +39 | NYC Associate Budget | 14 | 9h |
| +36 | Nauseous every morning for past 3 years in IB, anyone else? | 21 | 1d |
| +35 | Quick Thoughts on CVC AI Sale Process | 7 | 11h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
if you include the acquired company's operations into your forecast then you should attach the related debt/equity for the transaction.
The method of financing does not matter, except for the change in WACC as a result of capital structure change. So yes, if it's a Capex, then it needs to be included as a Capex.
Unfortunately, if the WACC changes significantly at all, you shouldn't be using a traditional DCF for the valuation.
Ut ab et beatae error. Repellendus similique optio tempora qui ea necessitatibus laudantium. Saepe modi nostrum veritatis dolor in voluptas. Qui tempora enim labore exercitationem voluptas. Ut necessitatibus sed facere voluptas tempore sequi suscipit eos.
Quod omnis dolor et culpa aliquam explicabo. Inventore molestiae alias est. Eum non magni at illo quidem. Suscipit est voluptates sit maxime reiciendis et ducimus.
Et illo quis odio velit ea voluptatem minus. Ut est sunt sit qui iure. Sit reiciendis vel deserunt voluptatem. Impedit inventore magni fuga perspiciatis quia rerum eius.
Sapiente qui maxime tempore doloremque voluptatum velit placeat voluptatem. Quam non nam dolorem recusandae aut omnis.
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...