Is it right to assume the following:
- Cash on BS: 50
- Debt 100
- EV: 500
-
Purchase equity: 500-100+50 = 450
-
min cash requirement: 20
Sources:
- New Debt: 100
- Sponsor equity: 450
>> Cash on BS is not available to the sponsor; a sponsor has no access to the cash ( i got told); the seller will keep anything over the min cash balance when selling); but still the sponsor has to pay for it. Therefore putting cash on Sources side is wrong.
Uses:
- Purchase equity 450
- Debt refinanced: 100
- min cash: 0 (20-50; cash on bs is enough to cover min cash)
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