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Leveraged Buyouts: A Practical Introductory Guide to LBOs by David Pilger

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Chapter 5: How Much and Who’s Paying For It?

This chapter is concerned with those stages in the analysis where we work out how much a buyout will cost (uses of funds), where the money to pay for this might come from (sources of funds and leverage), and gauging whether a deal offers good value or not. This example is explained from a practitioner’s point of view, using MS Excel – just as it would be created in a professional setting. Templates and example models can be found atwww.fin-models.com.

Uses of Funds

Price

We begin our analysis by entering the ABC Company’s current stock price of $25.00 in cell (F17).

In order to entice the current shareholders of ABC Co. to sell the stock, we assume that there is a transaction premium of 20% ...

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