medium · Investment Banking
How is the Original Issue Discount (OID) handled during the 're-balancing' of the Balance Sheet in a Pro-Forma M&A model?
- OID is ignored for Pro-Forma purposes and debt is recorded at par.
- The target's existing OID is added to the new acquirer's OID.
- The existing target debt and any associated unamortized OID are removed, and new debt is recorded net of the new transaction OID.
- The OID is recorded as an Intangible Asset and amortized over 15 years.
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