Apologies if this is obvious, but when a PE firm acquires (for eg) Company A and Company A has existing debt, where do the fees to pay back that debt show up in the model? Given it will be sellers/Company A's responsibility to close it out pre-close (cash free debt free txn), do we see that anywhere in the model, or is it assumed to be reflected in the purchase price? If Company A had just received debt and call provisions were 101 / anything over 100, it could be expensive.
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Reflected in the purchase price. In practice, it's pretty much never the case that ownership is passed over cash-free debt-free--everything gets captured in closing adjustments to arrive at the actual $ consideration.
Yes, sometimes called early extinguishment of debt or debt cancellation/extinguishment fee/penalty
Will sometimes see it as change of control clause or call protection/spread maintenance/prepayment penalty under credit covenants
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