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M&A Blog #09 – debt (Part V – asset based lending (ABL) and seasonal ABL)

Francine Way

If you have listed your car or savings account in your mortgage application, you are essentially trying to get a loan based on your current asset(s). Thus far, we have discussed many aspects around capital structure and debt financing, including how debt levels are determined by a company’s cash flows, enterprise value, and asset values.

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Building a Solid Foundation: Essential Steps for Paper LBO Practice

OfficeHours

Balancing debt and equity components are crucial to minimizing the cost of capital while maintaining financial flexibility. In general, this focus on cash flow will enable timely debt servicing and can allow the acquired company to bounce back stronger than ever before being taken public or spun off to another private equity firm.

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Why PE Investors Care About Interest Rates

OfficeHours

For the average person, rising interest rates are not ideal for those with significant amounts of debt, those looking to purchase a home with a mortgage, or many other use cases. Once the cash available is used to service the debt, whatever is left over is paid as dividends and used to calculate returns for private equity investors and LPs.

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Pandemic-Related Deal Litigation Highlights Buyer Leverage in Transactions Requiring Debt Financing

Cooley M&A

The decisions from the court on those preliminary matters, as well as the arguments raised by legal counsel, offer some valuable lessons for sellers considering sale transactions that require debt financing, and may motivate sellers to re-evaluate certain provisions and remedies that have become customary in those transactions.

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How Much Money Should You Have Saved by 30?

OfficeHours

Existing Debt : The US is a country riddled with debt. Others may have car payments, mortgages, credit card debt, or other debt that could be hanging over your head as a large liability. you get laid off or some other event happens resulting in a decrease in income). investment banking, private equity , VC, etc.)

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32 Due Diligence Red Flags

M&A Leadership Council

Here are 32 red flags to watch out for: Inconsistent Financial Records: Discrepancies or irregularities in financial statements, such as unexplained revenue fluctuations or irregular accounting practices, can indicate financial instability or potential fraud. See event info pages for details.

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Reconciliation Statement

Wall Street Mojo

A reconciliation statement refers to the banking summary prepared by the banks to list down the bank’s account balances and compare the same with their internal records. read more to have parity in the books of accounts of both legal entities. It keeps accounts up to date and helps simplify accounting errors and theft.