PE Case Study - Pro Forma Balance Shett & Mngt. Rollover
I found the PE case study below, but I'm not sure how to treat the PF balance sheet and the management rollover:
"The transaction is contemplated to be structured as a stock purchase deal with no step-up in the basis of the assets (i.e. there is no need to perform purchase price accounting). Assume that existing debt on the balance sheet will be repaid and will be charged a prepayment penalty of R$5 million. In addition, transaction costs are estimated to be R$20 million. The transaction is expected to close on December 31, 2019. For your analysis, assume that the company needs R$50 million of cash on the balance sheet post transaction close and the transaction will be financed with excess balance sheet cash, sponsor equity and debt financing. Management will also contribute to the deal by rolling over 30.0 million shares
1) How should I perform the PF Balance if the question says that we shuldnt perform purchse price accounting? How will the PF BS match if I consider the new debt and doesnt consider goodwil? 2) How should I consider the management rollover in this case? It will be the share acquisiton price * 30 mm shares?
Thanks in advance
Interested in as well
Thanks Rover-S! But another question, on my Uses and Sources table, do I consider the management rollover? If so, for what value I consider it? 30mm shares * acquisition price? Thanks!
Mgmt equity will be a source (30mm shares * purchase price/share) and a combination of sponsor equity and debt will be used to buy out the remaining equity (remaining shares * purchase price/share).
Thanks for the help Frogger! Another question, the $5 million prepayment penalty, will be capitalized in the balance sheet (similar to financing fees) or it will reduce company's pro forma equity (similar to transaction costs)?
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