Practice

An Acquirer's after-tax Cost of Debt is 6%, and it uses 60% Debt and 40% Cash (2% after-tax cost) to fund a deal. What's the Weighted Cost of Acquisition?

Immediately after announcing a deal, an Acquirer's Combined Enterprise Value is $780M. A few months later, the market decides the Acquirer overpaid by $30M. What's the new Combined Enterprise Value?

An Acquirer's Equity Value falls by $40M after the market decides its acquisition premium wasn't justified. It has 50 million shares outstanding. By how much does its share price fall?

Using Company A (Enterprise Value $200M, EBITDA $20M) and Company B (Purchase Enterprise Value $100M, EBITDA $20M) from before, what's the Combined TEV/EBITDA multiple after the deal?

Company A's standalone EPS is $1.50. After an acquisition, its Combined EPS is $1.80. What's the percentage accretion?

Company A has an Equity Value of $100M, Net Income of $5M, and a 50% tax rate. It acquires Company B for a $50M Purchase Equity Value (no premium) using 100% Debt at a 10% interest rate. Company B's Net Income is $2.5M, at the same tax rate. What's the Combined P/E multiple?

An Acquirer purchases a Target for a $700M Equity Purchase Price. The Target's Common Shareholders' Equity is $900M, with no write-ups or other adjustments. Since negative Goodwill isn't allowed, what Extraordinary Gain gets recorded?

An Acquirer has a P/E multiple of 18x. The Seller has a Purchase P/E multiple of 22x. In a 100% Stock deal, is this accretive or dilutive?

An Acquirer has $250M of Debt and $80M of EBITDA (3.1x Debt/EBITDA). Peer companies average 5.0x Debt/EBITDA. How much additional Debt could the Acquirer raise to reach that peer level?

An Acquirer has an Equity Value of $700M. It acquires a Target for a $220M Purchase Equity Value in a 100% Stock deal. What's the Combined Equity Value?

A Combined Company has EBITDA of $180M and total annual Interest Expense of $40M after a deal closes. What's its EBITDA/Interest coverage ratio?

Using the same deal (Acquirer Equity Value $700M, Target Purchase Equity Value $220M), what's the Combined Equity Value if the deal is instead 100% Cash?

An Acquirer funds a deal with 40% Cash at a 3% after-tax cost, 35% Debt at a 5% after-tax cost, and 25% Stock at an 8% after-tax cost. What's the Weighted Cost of Acquisition?

Company A has an Equity Value of $800M and Net Income of $80M (a 10x P/E). It acquires Company B for a $1,600M Purchase Equity Value in a 100% Stock deal; Company B's Net Income is $40M, at a 25% tax rate. How much in pre-tax Synergies are needed for the deal to be exactly neutral?

An Acquirer has an Enterprise Value of $700M. It acquires a Target with a Purchase Enterprise Value of $200M in a 100% Stock deal. What's the Combined Enterprise Value?

An Acquirer purchases a Target for a $1.2 billion Equity Purchase Price. The Target has $700M in Common Shareholders' Equity and no existing Goodwill. The Acquirer writes up PP&E and Other Intangible Assets by $150M, at a 25% tax rate. How much Goodwill is created?

Company B has a Purchase Enterprise Value of $100M and EBITDA of $20M. What's its Purchase TEV/EBITDA multiple?

Company A has an Enterprise Value of $200M and EBITDA of $20M. What's its TEV/EBITDA multiple?

An Acquirer has a Cash balance of $180M and requires $60M of Minimum Cash. How much Cash is available to fund an acquisition?

Expected Synergies are $50M per year, valued as a simple growing perpetuity at a 10% Discount Rate with 2% long-term growth. What's the approximate Present Value of these Synergies?

Company A has 20 shares outstanding at a $40.00 share price and Net Income of $30M. It acquires Company B for a $200M Purchase Equity Value in a 100% Stock deal; Company B's Net Income is $15M. Assume the same tax rate for both. What's the Combined EPS?

A Seller has Net Income of $40M and a Purchase Equity Value of $500M. What's the Seller's Yield?

An Acquirer wants to fund a deal with 100% Debt. The Seller's Yield at the purchase price is 7.5%, and the Acquirer's tax rate is 25%. At what pre-tax interest rate on the Debt does the deal turn dilutive?

Company A has an Enterprise Value of $1,000M and EBITDA of $100M. It acquires Company B, which has a Purchase Enterprise Value of $500M and EBITDA of $25M. What's the Combined TEV/EBITDA multiple?