Insights

Private Equity Debt Ratio Analysis

  • Peter Lynch

In a control private equity transaction, debt is commonly employed to acquire a business. This debt creates obligations of interest and principal payments that are due on a timely basis. If these payments are not made creditors can take action to recover the sums borrowed by the company.

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Private Equity: A Primer on the Letter of Intent (LOI)

  • Peter Lynch

A Letter of Intent (LOI) is a largely non-binding document entered into by the potential sellers and buyers of a company. This document helps serve as a guide for the documentation required to consummate the transaction (the “definitive agreements”).

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Intercreditor Agreement Overview

  • Peter Lynch

I once worked on a transaction where every item had been negotiated and all documentation was drafted and in final format, but a single number in the Subordination and Intercreditor Agreement nearly caused the entire transaction to fall apart.

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LBO Pro Forma Balance Sheet Adjustments

  • Peter Lynch

The purpose of this post is to translate the language surrounding purchase accounting into a financial template with instructions that cover the balance sheet adjustments for most control transactions.

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Example Due Diligence Lists and Deal Process Overview

  • Peter Lynch

Providing an initial due diligence list is often a great way to initiate transaction-related dialogue with a CEO or management team interested in exploring a capital raise or sale of the business. Typically a due diligence list will evolve and expand as interest in a transaction grows, but it can be intimidating if the initial list provided is too thorough. Collecting a large amount of company data and presenting it in a shareable format takes considerable effort, which makes a short diligence list a helpful introduction. The template available for download contains two such due diligence lists.

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