Modelling from CIM/ help

Hi guys,

Following questions when building a model from a CIM (case study 3-4h prep time) nad building BS

1.) Adjusted vs. normal EBITDA: Do i take the adjusted EBITDA from the IS in the back of the CIM or the unadjusted?
2.) NWC: If NWC for business plan period is given, should i take these numbers or build myself, by e.g. % of sales?
3.) Capex: If Capex is given, should i take these numbers or build myself?
2.) DTA / DTL: Can i ignore these going forward and reset to 0?
3.) NOL: Can i ignore going forward? Or am i required to build in?
4.) Existing GW amortization: Ignore?
5.) Accrued interest: Ignore?
6.) Minority interest?
7.) Impact of Pensions?
8.) Other non recurring items?

Thank you!

 
Most Helpful
  1. For NBO: always adjusted. You can conclude in due dil that assumptions were unrealistic and lower price. Adjusted for historicals is better anyways as your drivers will make more sense (see if adjustments make sense before using them)
  2. For all of this: I always make at least 2 cases: sell side and my case with the assumptions I believe are reasonable
  3. see 2
  4. --> please check the numbering of your list. DTL often taken as debt-like item. DTA often not taken as cash, or only if converted into cash within 2 years or so
  5. Would include as has significant impact on cash flow
  6. Yes ignore, you calculate a new amount of goodwill (EV minus net asset value) and amortise that going forward (not tax deductable in all countries in the world)
  7. part of net debt, will be repaid by seller and you subtract from EV to equity value
  8. value separtely, might be much more/less valueable than bookvalue!
  9. Not sure what your question is, you want to stop paying for pensions :)? Deficits are recalibrated yearly, so should be reflecting fair value --> debt like item from EV to equity
  10. see 1
 

Please renumber the items in your first post - it's confusing.

Re 6 Goodwill: country specific. Think most GAAP will let you amortise it, while tax man has different rules. Re7: if you mean accured interest: just like normal debt of the target: use. If pensions: both source and use (in case it will be assumed by buyer) Re 8: if you mean minority interest: exclude the cashflow from your initial valuation. Enterprise value in that case excludes the minority interest. Then value seperatly (or leave it with seller) and add to purchase price.

 
  1. IFRS only impairment is allowed I think?

  2. OK. So would deduct from EV to Equity. If pensions paid back, not in S & U?

  3. So not in EV to Equity bridge?

In General (what really confuses me): For the S&U on Uses: Here I put the Equity value that I calculated in the bridge. What about these other items; e.g. MI, pension, Accrued interest etc; do I put all of them in S&U?

 

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