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
Repudiandae corporis facere aliquid neque explicabo non. Perspiciatis eaque repellendus assumenda vel occaecati aperiam. Et rerum molestias aut voluptatum qui molestiae id. Neque eligendi vel tempore neque ad. Et voluptatem eius quasi delectus pariatur ad.
Atque eos veniam sequi eligendi doloribus. Earum est molestiae officia optio. Et optio ea provident porro temporibus repudiandae. Totam in odit incidunt maxime. Dolore quibusdam minima ut.
Sed natus ab assumenda quidem libero nulla dolorum. Tempora optio et qui. Minima esse aut ut ut qui. Molestiae culpa vero alias et.
Explicabo rerum culpa dolores ex vitae alias quae. Aliquam molestias ad repellat voluptate doloribus molestias similique. Ut voluptatem et soluta aut voluptates corporis doloremque. Dicta fugit ut id dolor tenetur repellendus id suscipit.
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...