Exercise 5: Outputs and Analysis in Acquisition
Computing Pro-forma Balance Sheet in Acquisition
Exercise 6: Balance Sheet and Pro Forma
Cash Flow Sweep with Crash and Default Analysis
Exercise 7: Cash Flow Sweep and Default
The tax aspects of an acquisiton model can become somewhat complex, particularly in the rather typical situation where purchase accounting is used for book purpoes, but for tax purposes the transaction is treated as a tax free exchange. When this case, the tax depreciation will be different from the book depreciation and deferred taxes will arise. Furthermore, the deferred taxes will expire as the existing assets retire unlike deferred taxes related to on-going capital expenditures and normal growth. A number of the complex issues associated with modelling tax aspects of an acquisition are addressed in Excecise 6. Other issues associated with taxes such as NOL and depreciation are covered in the corrporate fnance model exercises.