medium · Investment Banking
A buyer is performing a 'Contribution Analysis' for a merger. Company A contributes 70% of the combined EBITDA, but Company A's shareholders will only own 60% of the pro-forma company.
What does this suggest?
- The deal is highly accretive to Company A's shareholders
- Company B is significantly larger than Company A
- The deal is valuation-favorable to Company B's shareholders
- Company A carries meaningfully more net debt than Company B
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