I'm building an LBO model and I'm wondering if deferred tax liabilities (created from PPE write-up at purchase) should be included in the net debt calculation subtracted from TEV to find equity value to the sponsor. Thanks!
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No - the DTL you create from the purchase is used to counter the future DTAs from the actually taxes paid versus taxes on the statements. Based on this thought, you shouldn't include it in net debt subtractions.
Awesome, thank you!
Adding onto the above, DTLs are not interest-bearing liabilities and therefore wouldn't be included in net debt for the same reason that interest-bearing liabilities would not be included in NWC.
Also interested in this (again in an LBO context). Is my understanding below correct?
As a matter of interest, is this something that is commonly tested in modelling tests for MFs/UMMs as quite frankly it's something I'm struggling to get my head around.
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So how would you treat existing DTL/ DTA at entry; put them in uses and wipe of BS?! i am very confused about this topic; also do I have to substract at exit?
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