Bidding on the LBO
I am trying to exstablish what I will bid on a company which will be for a leveraged buyout. Do I establish the value of the bid based on the cash flows? I am very confused. What determines the value of a company that would allow me to make a bid?
I am confused because I know the PE investors have 1 billion in cash for the deal, and 1.5 billion in possible loans. I do not have information on shares outstanding, or the value of the shareholder's equity. I have done cash flows, present value cash flows for 6 years come to 800 million dollars after paying interest expenses. 10.4 times EBIT for the terminal value is around 5 billion. I feel that I do not have enough information to determine the price which I have to pay for the company initially. Surely the assets of the company have to come into it (minus liabilities) but I do not have those numbers. Can I value the bid based solely on cash flows and terminal value? Thanks much,
Mark
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