In an LBO as we walk from EV to Ending Sponsor Equity, should we be adding back total cash remaining at the end (including cash required for operations), or should equity value not include that cash as you likely need to leave that there for the next owner?
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Can't edit, but alternatively, wouldn't required cash be already in EV, so would adding back anything besides excess be double counting that cash?
So it's a little more nuanced. You would either A, leave for the next owner, or B pay it out as a dividend in the final year. The later would still increase cash inflows and raise IRR and MOIC.
You just add it back. I have never seen anyone leave cash. U just assume the level of working capital left is normalized and the revolver takes care or swings in nwc intra year
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