Hi ran into a LBO problem on stub period.
everything is normal except the closing transaction date is Sep2023 instead of Dec2023.
We have 2021FY, 2022FY, Sep2023 BS / IS / CF
Q1. when we do premium allocation, do we just go straight to Sep2023 BS and get Sep2023 Pro Forma?
Q2. Once we get the Sep2023 Pro Forma, what do you do to get the FY2023 BS?
Example Q:
FY2022 Cash = 30
FY2022 Net Income =5
Sep2023 Cash =40
Sep2023 Net Income =10
FY2023 Projected Net Income = 20
what is FY2023 cash? 30+20 or 40+10? Completely confused..
Can even comp for a call to go through. Would really appreciate some help...
You are definitely overthinking it.
You literally just need to do a three statement model with one extra column for a stub period that roles into the following year. Would love to take your money but the modeling is really very straightforward!
Not sure I understand your first question on premium allocation - can you clarify?
On #2: if your question is mechanically how would you model it, Dec-23 / FY-23 cash would be Q3-23 cash as starting point + Q4 cash generated (10 in your example), with the 10 of Net Income being added to shareholder's equity to get the B/S to balance. But as you point out, you get to the same point if you started with the Dec-22 balance sheet and just added total FY 2023 NI to both sides of the balance sheet... if you already have a quarterly model just do the first step, otherwise do the latter. Does that help or was your question a different one?
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