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
Asperiores commodi nobis harum et. Eos ex laudantium possimus. Nulla quidem voluptatem rerum. Neque aliquid ducimus odit saepe velit. Nihil nisi et earum est voluptate quis. Cumque ea ducimus doloremque earum magni ducimus voluptatem voluptatem.
Et est ut minus accusamus. Quia ut blanditiis quae non. Perferendis aut aut et iste.
Cumque consequuntur laboriosam ex enim velit. Fugit eaque et debitis impedit quia.
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...