Hi all -
Working on a deal where we assume all debt, and raise new debt to pay off debt-like items on the BS (with some wiggle room to reduce our equity as new debt > off-BS debt we're paying off).
My questions are:
1a) Is my S&U correct (version 1)?
1b) Is my S&U correct (alternative version, my boss likes to see it this way with revolver availability as source)?
2) How to calculate goodwill properly - am getting stuck with the debt-like item paydown?
EV - $80M
Term Assumed - 55
Off-BS Debt-Like - 5
RLOC Drawn - 10
Cash - 0.5
Assume 1M in sponsor fees and 800K cash to B/S. Assume 11M of new debt to refinance the $5M. Assume 19M RLOC capacity.
Waterfall is 80 - 55 - 5 - 10 + 0.5 = 10.5M seller proceeds
1) S&U
Sources
Term assumed 55
New Debt 11
RLOC Drawn 10
OldCo. Cash 0.5
GP Cash 4 (plug)
Total Source 80.5
Uses
Seller Proceeds 10.5
Debt-Like Paydown 5
Term assumed 55
RLOC Drawn 10
Total Uses 80.5
2) S&U v2
Sources
Term Assumed 55
RLOC Available 19
New Debt 11
OldCo. Cash 0
GP Cash 4
Total Sources 89
Uses
EV 80
Excess Availability 9
Total Uses 89
3) Goodwill
Purchase Eq. Value = 10.5
Less; Book Equity = 5.09
Purch. Equity Value = 5.41
I end up bringing the 11 onto the BS, and because the 5 was off the BS, i get a difference of 5 (assets less than L&E).
Thank you in advance...
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