Does anyone know how PIK interest is accounted for in an LBO? More specifically, if Mezzanine debt has 10% Cash interest and 5% PIK interest, would both cash and PIK interest be added to the total interest expense in the income statement?
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All interest expense, including non-cash PIK, is reported on the income statement. Then, you’d add back the PIK interest on the cash flow statement
gotcha - thanks for the clarification
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