Company A: EV $100, market cap $80, EBITDA $10, NI $4. Company B: EV $40, market cap $40, EBITDA $8, NI $2. A acquires B with 100% debt at 10% interest, 25% tax rate. What are the combined multiples?

Question

IBPrep · Accepted Answer

Combined market cap = $80 + $40 = $120. New debt = $40 (paid to B's shareholders).

Company A: EV $100, market cap $80, EBITDA $10, NI $4. Company B: EV $40, market cap $40, EBITDA $8, NI $2. A acquires B with 100% debt at 10% interest, 25% tax rate. What are the combined multiples?

Answer

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