Hey all,
I have the PE Prep Pack, and am doing the first full 3 hour model. In doing the balance sheet adjustments, I see that the goodwill calculation is essentially just a plug difference between the pro forma adjustments. I am wondering why that is, and why the goodwill calculation isn't the equity purchase price less existing BVE?
Thanks
WSO PE PREP PACK - Question (Originally Posted: 06/19/2014)
All,
am going through the new PE prep pack that WSO has released a few weeks ago right now. First off, it is a great piece and really helps to a) understand the process and b) know what to expect and to prepare for. Also, the technical section is top notch.
I have a question on the 3h lbo model (first example that is described in the pdf) and hope anybody who has worked through this already could shed some light: - the OID is calculated for the entire staple financing package even though you are not using all of it in the given example. - technically this does not make a difference here because you are only using the full tranche where you do get an OID. More generally however, wouldn't the formula that is currently in cell J102 of the model become false as soon as you have an OID on any of the tranches that you do not use?
Would appreciate your input. Thanks.
correct. In this example the way it is modeled will give the right answer just fine, but it is not robust to doing different capital structures. A more robust way of modeling it would be to link the OID to the Sources side of the Sources and Uses table (D98:D100) instead of the Assumptions table.
We will update the model to make it more robust.
.
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