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Mergers and Buyouts

2 tools in the Investing area.

LBO Model

A one-page leveraged buyout: a buyer pays a multiple of a company's EBITDA, borrows part of the price, uses the company's cash to repay the debt and sells after a few years. Enter EBITDA, the purchase multiple, the debt, the interest rate, growth, the years held, the exit multiple and the share of EBITDA left as cash; the page shows the purchase price, the sources and uses of money, the debt paid down year by year, the value at exit, the money multiple (MOIC) and the yearly return (IRR), then splits the gain into EBITDA growth, the change in multiple and debt paydown, with tables of the return against exit multiple, years held and leverage. Advanced mode adds a revenue and margin cash flow, two debt tranches, fees, a minimum cash balance, a management pool and a dividend recapitalisation. A calculator for education and analysis, not investment advice.

1 worked example reproduced, listed on the tool page.

Merger Accretion and Dilution

Does a deal raise or lower the buyer's earnings per share? Enter the net income, shares and share price of a buyer and a target, the premium offered, how much is paid in stock and how much in cash borrowed at an interest rate, the tax rate and the cost savings expected. The page works through the deal in the order it is done by hand: the price paid, the new shares issued, the interest on the new debt, the combined earnings and the combined share count, and from them the earnings per share after the deal and how far it is above (accretion) or below (dilution) the buyer's own. It also shows the savings needed to break even and why comparing two price-to-earnings ratios predicts the answer for an all-stock deal. Accretion is arithmetic and is not the same as value creation. A calculator for education and analysis, not investment advice.

1 worked example reproduced, listed on the tool page.

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