Dividend Payment Just Before Completion Workout
- 01:20
Dividend Payment Just Before Completion Workout
Transcript
This workout is a follow on from the previous workout. So it's asking us, recalculate the true up assuming the target pays a dividend of 20 just before the completion accounts date. Now, the enterprise value isn't going to change because that's just the value of the business at that point in time. Also, the debt is not going to change either. It's still going to be deduction of 101 but of course, the cash will change because a dividend's been paid. So the cash will be, well, was originally 52 and I'm going to subtract 20 of the dividend that was paid. So the cash balance is only 32. The operating working capital adjustment will be as normal. The CapEx adjustment will be as normal too. So the final equity value based on this new adjusted equity value based on a dividend being paid is 216. So the true up in this case, we would compare the final equity value with the actual equity value based on the estimated at closing, which is 220. So that's a negative four. And instead of the buyer paying, in this case, the seller would pay because actually the final equity value is only 216 when it was originally estimated to be 220.