Equity Value - Entry vs. Exit in an LBO
Rosenbaum and Pearl quote different calculations for equity value at entry and exit on an lbo. In case of an entry, the common calculation is used - i.e. Equity Value = EV - Total Debt - ... + Cash
However, in case of the exit, they quote it as Equity Value = EV - Total Debt - ... - Cash
Can someone please elaborate on the discrepanxcy?
Did you just list two identical formulas?
Yes, my apologies. I edited it.
Interesting. I'm guessing either the cash is assumed to be dividended out separately, or they're referring to a minimum cash balance for operations that needs to be left in the business.
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