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Comments (6)

  • Analyst 1 in IB - DCM
Apr 7, 2021 - 6:09pm

This question doesn't make any sense the way you've phrased it. If an interviewer asked this, he would want you to ask what the Company is doing with the asset sale proceeds and if the EBITDA number is forward looking or not. Assuming it's NTM EBITDA and 100% of the asset sale is used to pay down debt, then it's just plug and play.

Total Debt: $3Bn

NTM EBITDA: $500MM

NTM EBITDA attributable to asset: $100MM

Asset Sale Price: $500MM or $700MM

I'm sure you can figure out the rest.

Apr 7, 2021 - 6:28pm

Thank you. That's the direction I was thinking towards. I just assumed that the company would use the proceeds from the asset sale to pay off debt. Why does the forward-looking multiple matter tho?

  • Analyst 1 in IB - DCM
Apr 7, 2021 - 6:37pm

The multiple doesn't necessarily need to be forward, all I was getting at was that historical leverage can't change so make sure the interviewer wants a forward EBITDA when calculating leverage.

Again that's why this question doesn't make sense because leverage wouldn't change at the time of sale.

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