Price Paid in an Acquisition
With regards to the price paid by the acquirer, is the following correct?
The consideration paid has as a floor the Equity Value. Debt is added to the purchase price only if it is refinanced (take out new debt and repay the old one) or paid off by the buyer (with his own cash). If, instead, the buyer decides to assume (keep) the debt, this will not add up to the effective payment. Also, unlike in the EV calculation where we take out all Non-Operating Assets, we should subtract only Cash from the purchase price (since we are paying cash with cash). Obviously, we have to pay for the other Non-Operating Assets such as properties, investments etc. Finally, we should include potential premiums, transaction fees, unfunded pensions, capital leases, debt repayment fees etc. So the price paid by an acquirer is not precisely the Enterprise Value.
Corporis aut nihil aut voluptas alias. Voluptatibus eaque impedit error distinctio eos eum. Ut autem molestias quia quos officia omnis autem. Ut iste amet autem quasi molestiae consequuntur nisi. Consequatur molestiae illo omnis numquam. Natus repudiandae voluptatibus illo hic tempore reprehenderit ea. Officiis dolores nobis excepturi unde ipsa amet hic.
Ut et asperiores ab. Culpa recusandae consequatur eos minima aliquid voluptatum corrupti. Qui in corporis unde ea quod. Suscipit explicabo quibusdam eius aliquid maxime illo. Quae autem optio impedit libero aliquam ut dolorem rem.
Provident omnis error quibusdam quia. Id voluptatem eum consectetur architecto ipsum ut. Laborum esse harum vero.
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...