Quick question that I hope some of you experienced banker can help me understand.
Say a PE firm is looking to take a publicly traded company private. Let's assume the public company has:
Market cap: $500
Enterprise value: $600
For simplicity, let's say the PE firm doesn't pay any premium. So they acquire the public company for $600 EV. What happens to the $200 debt and $100 cash that was on the balance sheet? Does the company keep the existing debt and cash on the balance sheet? Or do both cash and debt get wiped out and PE firm starts running the company with a fresh balance sheet?