Sources and uses
大家好，
One element in banking/modelling I have constantly seen people dont understand is sources and uses,包括我自己. I have obviously modelled with it many times, but my understanding is purely mechanical. Therefore I want to see if anyone in here will be able to help me once and for all :)
让我们使用一个非常简单的例子：说一个目标有一个EVof 100$ with 20$ in cash and 60$ debt onBS. It is financed with 70$ sponsor equity and 50$ debt (assuming minimum cash balance of what they currently has on BS). This gives a S&U of:
Sources:
Equity: 70$
债务50 $
用途:
Net debt: 40$
Minimum cash: 20$
Equity: 60$
Some questions on this as I believe it is the cash element that is confusing:
- What happens here/what will be the difference if they decides to pay down the debt rather than refinance/roll over the debt?
- Why do we use net debt in the uses rather than the gross debt?
- What mechanically is happening with the debt and cash at settlement?
- 如果我们假设没有最低现金余额，那么在解决方案中，目标现金和债务会发生什么，仅将净债务包括在使用中吗？
- I have seen multiple times that some uses the target's cash in the sources - what does that mean and how is that possible?
Hopefully someone here can answer this, many thanks!
Best,
K
Comments (8)
嗨，IB中的1个 - gen，这些线程中的任何一个有帮助：
More suggestions...
Fingers crossed that one of those helps you.
我如何阅读您的假设，这就是我将如何构建S＆U：
Sources: $70mm sponsor equity funding, $50mm newly issued debt
用途: $60mm equity purchase price ($100mmEV+ $ 20毫米现金 - $ 60mm债务），再融资$ 60毫米现有债务
从此赚钱（而不是净债务号）是清洁的。回答您的问题：
1. There would be a difference if you pay down debt rather than refinancing it. If you have $20mm of cash, you can only reduce your debt by that amount, bringing your debt to $40mm and your权益价值至$ 60mm。现金属于股权持有人，因此他们不想偿还交易前的债务
2. Not sure I'm following- rephrase? I don't use net debt
3. Not sure I'm following- rephrase?
4. Cash belongs to the equity holders. If the acquirer doesn't want to pay equity or issue debt to acquire cash (you're acquiring all of the equity, which equity owners own the cash, so indirectly acquiring equity), then you would use target co's cash as part of sources
下列的
You already showed S&U with the debt refinanced. If you roll it you put it on both sides of S&U.
1. If the debt is rolled over, the existing debt of 60 would show up in both sources and uses. If debt is being refinanced, the existing debt of 60 is paid down (shown in uses) and immediately replaced with new debt of 70 (shown in sources).
2.实际上，大多数人使用总债务。它没有拥有20现金来减少现有债务，而应符合最小现金要求。
3. If there is no min cash requirement, the 20 of existing cash will become a source and will reduce the sponsor equity. The S&U would look like this:
用途
债务：60
购买权益：60
Total: 120
Sources
Cash: 20
债务：70
赞助商权益：30
Total: 120
4.在这种情况下，您花了60份股权包括20个目标现金。因此，您可以使用此20来帮助交易。这类似于花费120美元购买一块价值100美元的钱包，里面有20美元的钞票。
Fundamentally looking at it the wrong way. The purchase price governs the sources and uses, not some arbitrary definition of theoretical enterprise value.
扔掉您想要的全部。你们是光荣的打字员。
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