HL RX Case Study Modeling Question
Hi, would appreciate any help.
Q1:
When calculating the IPO Proceeds, I couldn't get the number, which is $39.5mn. The Post-Money Equity Value = Pre-Money EV + IPO proceeds.
Q2: Where did 37.6 and 2.7 come from? Also, why doesn't TargetCo's existing goodwill gets wiped out when getting acquired in this case?
Thank you !
For Q1 the 92.2 of the pre money equity value is going to be 70% of the post money value. Therefore 92.2 divided by .7 gives you like 131 which means like 39.5 gets raised in new equity money
Existing goodwill on target’s balance sheet doesn’t get wiped out because it is an asset that is being acquired. The accountants can separately assess if the goodwill is impaired later on but if the target still owns a good will asset that asset will be acquired by the buyer
Thank you. Helpful. Personally whenever I model I delete existing goodwill of TargetCo.
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