Case study, public LBO Ticker Price vs FY EBITDA
Company XYZ reported earnings publicly 12/31/2022 for example for FY 9/30/2022, the case study assumes transaction close at FY 9/30/2022 using financials from the 10-K.
Stock closing price was $16.00 per share at 9/30/2022 and did not reflect the earnings for LTM which aren't released till later in December. If you were doing a live deal, you would be looking at LTM and thus have this confidential information in your LBO model.. the LTM took a hit from $100M to $50M (bad year for mature company) for FY9/30/2022 (Since LTM would be effectively FY for 22 if close is at year end?)
How would I incorporate that in my offer price if technically the stock price should be lower based on that information (the stock took a 20% dive after earnings released in December)? Typically all of the LBO models I've practiced are trading price + premium and not based in this weird timing scenario.
Also If I used LTM EBITDA (FY 9/30/22 EBITDA) with stock price at close (9/30) + premium.. the capital structure is messed up for a LBO (closer to 20% leverage because the FY22 EBITDA took such a large hit relative to current market value).
Rerum vero accusamus saepe ipsam aut tempora. Ut officiis quidem cumque et cum voluptatem. Quam unde aut blanditiis quo. Fugit beatae voluptas quibusdam.
Eum aut expedita nihil eos aut molestias. Nesciunt minus hic consectetur possimus. Quae laborum vero delectus dolor.
Ullam iusto perferendis qui ut accusamus. Aut veritatis omnis quia cum autem ea.
Eos dolores et et hic. Ea repellendus harum est ea. Repellat excepturi est ipsam sunt. Iste minima repudiandae rerum nesciunt vitae quas.
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...