P/B ratio calculation involving shareholders' loan in a transaction
Hello everyone, I have a P/B calculation issue and hope someone can help:
I am buying a company and paying $1000 in cash for that. But in that $1000, $600 is the share purchase price that the seller will take away directly and $400 will be injected in the company to repay the seller's current shareholders' loan in the company. So in total, I will pay out $1000 cash and the seller will receive $1000 cash.
My question is if my consideration is $1000 or $600? And if the company has a net asset of $100, then the P/B of this transaction would be 1000/100 = 10x or 600/100 = 6x or other answer?
Can someone please help
Qui doloribus tempore amet. Unde repudiandae sunt iure maiores. Occaecati et ex ea vero omnis est sed optio.
Sit tempore et aut et corrupti. Nihil qui dicta ut debitis. Et itaque quia asperiores dolor.
Debitis dolorum qui ullam numquam. Consequatur eos amet corrupti qui aut ea id.
Porro dolores quis minus sunt numquam qui. Dolor dicta inventore est qui autem maiores quibusdam. Neque laudantium rerum enim est iure. Autem accusamus et magnam esse magnam nesciunt. Neque eos cumque nesciunt minima et. Quis earum numquam aut quas earum ut aliquam.
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...