S&U in LBO - question
Hi guys,
Theoretical question: we're building a S&U for a company with the following characteristics:
- EV = 1000 (EV / EBITDA = 10x @ 100 EBITDA)
- We know that the company has 100 of associates and 100 of NCI, 100 of provisions in the bridge (that should stay in uses?)
- Let's say you want to refi the existing bank debt of 300
What would the Uses look like?
Thank you!
EV= 1000
Equity value: 1000 - bank debt 300 - NCI 100 - provisions 100 + associates 100 = 600
Uses: (assuming ou buy out the NCI and assuming associates treated as cash like item)
Purchase equity: 600
Net debt: 400
Total Uses: 1000
Sources: New debt + sponsor equity
what are associates and provision? are these equity like or debt like items? haven't ever hear dof them.
By combining all factors, it's not clear that associates are not part of EV. Especially in this example where EV is calculated as EBITDA (excluding income from associates) * multiple.
Uses
Purchase price shares core business = 600
Repay bank debt 300
Buy out NCI 100
Buy associates 100
Sources
Assumed provisions of 100
Buyer financing 1000
Uses doesn't balance with sources here - how does that work?
Thanks
sorry i cannot follow
what are assumed provisions? why?
and why would you buy associates?
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