Great video! Just got a question for your net net debt on 2013 and the following years. Could you explain it to me why you didn't add the initial debt 600 into the formula to calculate the net debt please? Thanks~
you bought the equity from shareholders and paid the 600m debt to creditors. you start from scratch with 0 debt, then leverage the firm borrowing 14,400
They increased debt from USD600 to USD14,400 (using debt/ebitda of 6.0x). In other words, they can increase debt to 14,400 which includes USD600. Debt / EBITDA is used here to show till what extent you can raise debt
@@sandeepagrawal9167 if you are using the debt/ebitda of 6x, either you add the 600m to the calculated lbo debt or that 600m is paid off at entry if not refinanced i.e. the 14,400 is excluding the 600m hence it is assumed that the 600m have been paid off.
@@abdollar1 They increased debt from USD600 to USD14,400 (using debt/ebitda of 6.0x). In other words, they can increase debt to 14,400 which includes USD600. Debt / EBITDA is used here to show till what extent you can raise debt
They increased debt from USD600 to USD14,400 (using debt/ebitda of 6.0x). In other words, they can increase debt to 14,400 which includes USD600. Debt / EBITDA is used here to show till what extent you can raise debt
If the company had existing debt (say 2 million) and your assumption was the company could handle 10 million (5x 2 million in ebitda for example) would you subtract the 10-2= 8 million in extra debt added? Or would the old debt be canceled as part of the transaction via a payout?
They increased debt from USD600 to USD14,400 (using debt/ebitda of 6.0x). In other words, they can increase debt to 14,400 which includes USD600. Debt / EBITDA is used here to show till what extent you can raise debt
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Great Video!, it helped me to understand LBO
Great video! Just got a question for your net net debt on 2013 and the following years. Could you explain it to me why you didn't add the initial debt 600 into the formula to calculate the net debt please? Thanks~
you bought the equity from shareholders and paid the 600m debt to creditors. you start from scratch with 0 debt, then leverage the firm borrowing 14,400
They increased debt from USD600 to USD14,400 (using debt/ebitda of 6.0x). In other words, they can increase debt to 14,400 which includes USD600. Debt / EBITDA is used here to show till what extent you can raise debt
@@sandeepagrawal9167 if you are using the debt/ebitda of 6x, either you add the 600m to the calculated lbo debt or that 600m is paid off at entry if not refinanced i.e. the 14,400 is excluding the 600m hence it is assumed that the 600m have been paid off.
SO smart.
Why is Debt = to LBO debt? What happened to the 600M of Debt the company had pre-LBO? Shouldn't that be added to LBO Debt?
I had this question too
You don’t buy the companies debt
@@abdollar1 They increased debt from USD600 to USD14,400 (using debt/ebitda of 6.0x). In other words, they can increase debt to 14,400 which includes USD600. Debt / EBITDA is used here to show till what extent you can raise debt
They increased debt from USD600 to USD14,400 (using debt/ebitda of 6.0x). In other words, they can increase debt to 14,400 which includes USD600. Debt / EBITDA is used here to show till what extent you can raise debt
If the company had existing debt (say 2 million) and your assumption was the company could handle 10 million (5x 2 million in ebitda for example) would you subtract the 10-2= 8 million in extra debt added? Or would the old debt be canceled as part of the transaction via a payout?
They increased debt from USD600 to USD14,400 (using debt/ebitda of 6.0x). In other words, they can increase debt to 14,400 which includes USD600. Debt / EBITDA is used here to show till what extent you can raise debt
What happens when your company has a negative EBITDA?
It is losing value.