Acquire a target for $1B (50% cash / 50% debt). $100M asset write-up at 40% tax. Seller has $200M assets, $150M liabilities. Walk through the buyer's balance sheet effects.

Question

IBPrep · Accepted Answer

Assets: −$500 cash used + $100 asset write-up + $200 seller assets = net −$200. Liabilities: $40 DTL (write-up × tax rate) + $150 seller liabilities + $500 new debt = +$690.

Acquire a target for $1B (50% cash / 50% debt). $100M asset write-up at 40% tax. Seller has $200M assets, $150M liabilities. Walk through the buyer's balance sheet effects.

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Acquire a target for $1B