For paper LBO, let's say you hypothetically have enterprise value = 100 and cash = 50, what is the purchase price? Assume no debt
Assuming you get nothing else for the paper LBO, do you just assume equity value of 150? Equity Value 150 - 50 cash = 100 Enterprise value?
| +141 | Future of PE | 32 | 2h |
| +34 | Best industry/job for entrepreneurship? | 9 | 1h |
| +20 | How to Get on Career Track / Stay Post ASO years | 6 | 4d |
| +18 | What are you actually using AI for in PE? | 3 | 3h |
| +18 | Burn Out in PE - What Comes Next? | 3 | 12h |
| +15 | KKR comp for Principal | 20 | 3d |
| +12 | MBA and Private Equity | 6 | 1d |
| +11 | Buyside in London with nice WLB and pay | 2 | 16h |
| +10 | Undergrad summer PE analyst positions | 3 | 1d |
| +9 | 2028 Oncycle PE | 11 | 14h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
That's correct, if EV is 100 and cash is 50 then equity value is 150 (assuming no debt)
Got it. Thank you. And to be crystal clear, without any other information, that would be purchase price? (e.g., if they bought 50% of the company, they would pay 75)
This is a bit confusing to me as well. Correct me if I've missed something, but I'd think the purchase price is simply the TEV (enterprise value) in this case. Then you'd look at the debt/equity used in this purchase price to find the sponsor equity % stake. It doesn't matter what the equity value is because as high as it is, it's offset by the cash of the business immediately received, as paying cash to receive cash is redundant. I would appreciate if someone with experience could provide a good answer though.
Autem quis ipsam iusto cum. Id laudantium enim natus corporis. Qui error omnis dignissimos sunt assumenda.
Itaque asperiores cupiditate dolorum explicabo consequuntur nobis voluptatem aut. Dolor laboriosam libero quas sapiente sequi nesciunt dolorum qui. Laboriosam officia blanditiis vero qui unde quisquam.
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...