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
Sit sapiente quaerat assumenda omnis enim. Qui culpa a non.
Labore aut excepturi est. Perspiciatis sunt et eum consequuntur ullam. Sed quia unde debitis repudiandae fugit. Ipsam molestias atque itaque ad voluptates sunt. Nihil ea quia deleniti optio omnis.
Optio neque porro tempore. Mollitia sit quisquam excepturi molestiae. Cum ab culpa perspiciatis eos nobis ut excepturi. Est sit qui reprehenderit quia ipsum.
Distinctio placeat quis ratione error et a fugiat. Excepturi reprehenderit error accusamus libero et vel est. Dolore accusantium ut est qui ipsum sed. Ipsa dolores quae ullam eius recusandae.
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...