Transaction value tricky question
- 80% acquired for $80M now
- €10M if EBITDA target reached in next year
- 10 year seller note of €10m What is the total transaction value incl. the retained 20%?
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Rover-S Marcus_Halberstram
Ok, this is how it works. 80% for 80 implies total equity value of 100 with the management rollover (read ownership representing) 20. You don’t have the equity / debt financing split but it seems per the context that the only debt financing note is the seller note which is 10. So this gives you a total transaction value of 110. The earn out of 10 doesn’t factor into the sources and uses and it is recorded as a liability for next year. If mgmt hits the target, its paid otherwise you’ll write it off as a gain on income statement.
So, to sum up, the way you’d answer this question is total EV of 110 (ex earnout)
Where did you get an earnout number? I thought seller notes were completely different form earnout in that seller notes are just another type of financing that was sub to senior debt and specifically issued from seller rather than another lender.
This reads like an earnout: EU10M if EBITDA target reached in next year It implies to me (but would have double checked) that If ebitda target is met next year, further 10 will be paid.
Seller note / vendor paper is independent of earnout. Mgmt / seller has issued a 10 dollar note that clearly needs to be paid within a fixed time interval and though doesn’t have interest rate specified, fair to conclude: its a seller note that’s financing part of the transaction value (hence will show up in the sources section)
Since your total sources are 110, your total TV must also be 110 (ex earnout and tx expenses)
Hope this helps
Oh.. I thought that was a typo and was supposed to be 10M "OF" EBITDA lol...
could you please stop commenting on every post
Who are you again?
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