Retained Earnings Pro Forma Buyout

Hi there,

I'm an analyst at a Hedge Fund working on a new issue and was hoping you guys could help elucidate something for me.

Essentially, PE is doing an LBO to acquire a company from another PE (say 400 in notes, 200 in cash injection). In the Capitalization table pre-acquisition equity is a few million GBP in the red (due to negative P&L account; say -200) but, pro forma the acquisition, is equal to the equity injection which is part of the acquisition (200). Now the 400 in debt was used to pay a shareholder loan (400) to previous PE, which leaves the 200 cash injection. However, Equity jumps from -200 to 200, a 400 change.

Is it possible that the historical retained earnings is just set to 0 as the firm changes hands?

Thanks

1 Comments
 

Dolorem nam consequatur a. Ipsum voluptate inventore rem at numquam quisquam vero. Voluptatibus ipsa ea voluptatem quibusdam.

Ipsum pariatur repellendus libero architecto cupiditate. Asperiores tenetur ipsa quasi dolorum necessitatibus ut est.

Illum consequatur labore et dolore molestias. Qui error laudantium esse debitis sint voluptas. Iste aspernatur ad nobis quaerat qui dolor a voluptatem. Explicabo eum veritatis nostrum asperiores ut iste pariatur. Ut quibusdam et error.

Ipsa commodi consequatur consequatur eos et voluptatum quaerat. Temporibus exercitationem culpa a provident praesentium. Explicabo est tenetur quidem. Ut ex eius dolorem et ipsum dolor illum. Nostrum consequuntur ut ea voluptatem voluptas perferendis.

Career Advancement Opportunities

October 2026 Private Equity

  • Blackstone Group 99.6%
  • The Riverside Company 99.3%
  • KKR (Kohlberg Kravis Roberts) 98.9%
  • Warburg Pincus 98.5%
  • Vista Equity Partners 98.2%

Overall Employee Satisfaction

October 2026 Private Equity

  • Blackstone Group 99.6%
  • KKR (Kohlberg Kravis Roberts) 99.3%
  • The Riverside Company 98.9%
  • Ardian 98.5%
  • Warburg Pincus 98.1%

Professional Growth Opportunities

October 2026 Private Equity

  • Bain Capital 99.6%
  • Blackstone Group 99.3%
  • The Riverside Company 98.9%
  • Starwood Capital Group 98.5%
  • KKR (Kohlberg Kravis Roberts) 98.2%

Total Avg Compensation

October 2026 Private Equity

  • Principal (9) $653
  • Director/MD (24) $547
  • Vice President (100) $364
  • 3rd+ Year Associate (106) $280
  • 2nd Year Associate (236) $272
  • 1st Year Associate (414) $231
  • 3rd+ Year Analyst (33) $157
  • 2nd Year Analyst (97) $134
  • 1st Year Analyst (274) $126
  • Intern/Summer Associate (40) $79
  • Intern/Summer Analyst (357) $61
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”