In order to review our credit statistics we're going to need interest on so in order to do that we go to the model intro tab, make sure the search switches turn to a 1 and then we go into our file options.

Go to formulas and make sure we've enabled iterative calculations.

Performing credit analysis in an m&a model helps you decide whether the acquiring company can afford to take on the debt. It's looking to take on.

Particularly, if the company has a credit rating that is investment grade and they're looking to maintain that but also any company with the credit rating really doesn't want to see that credit rating come down by more than two notches.

So we've got lots of information that we've compiled it. We've got the total debt. That's the long-term short-term and the convertible Bond. They're all from the new Co company tab.

And then we've added in NCI Equity total capitalization Etc. So let's have a look what that does.

To two sections, we've got the proforma credit statistics and we've got buyers Standalone credit statistics.

If buyer had stayed on its own we can see would have had total debt to eat at 1.5 times, which is relatively low and would normally be associated with an investment grade credit rating.

Their ebits are interest expense are their coverage ratio very high very healthy of 18.2 times. They can pay their interest 18.2 times. That's amazing.

Total debts total capitalization middle level about 32.6% and ffo to debt are your funds from operations that you could use to pay off debts 52.4% Now let's look at what happens after the deal at the proforma figures and we can see that their total debt to ebitdar has shot up from 1.5 to 4.3.

That's a very high number. Your investment grade credit rating would certainly be in danger at those kind of levels.

The interest coverage while still covering the interest and above dangerous levels of maybe two to three. It's still dropped from the very high 18.2 to 4.9.

And the total debts total capitalization is a relatively High 56.8% However, what we do notice about all of these statistics is that they improve dramatically as time goes on as the death has been paid down and as the e-bit are improves in this growing company.

So would the debt have been enough to Scupper the deal? Well, the answer is it depends? If you care about your credit rating and you don't want it to drop more than two notches, then this would be in real danger of scuppering the deal.

However, if you talk to your shareholders talk to your debt holders, let them know what your plans are and that we're trying to get the debt down as quickly as possible and improve those ratios. Everyone may see that this is a worthwhile endeavor.