How to Measure IRR for Acquirer in M&A Setting?
If Company A (Acquirer) is acquiring Company B (Target) with a mix of cash from the balance sheet and new debt, and assume Company B is spun-off in 5 years, how would one measure IRR for Company A for this acquisition?
Would the cash from balance sheet be considered the "investor equity" that is used as the initial outflow in the IRR calculation? Or would I include the new debt as a part of the "initial outflow" in the calculation? (also assuming no debt repayment until exit)
Would super appreciate any help here!! Thanks~
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