When solving a simple paper LBO model, how do you account for transaction fees?
Let's say the EV is 1000 and you acquire the firm using 70% debt. Transaction fees are 50 and existing cash is 50. After 5 years cumulative FCFE is 200 and you can sell the firm for 1200.
Is it correct that the cash multiple = (1200 + 200 - 700)/300 = 2.33? How do you account for the existing cash and the transaction fess in this kind of calculation?
Many thanks in advance,