hard · Investment Banking ma-lbo
In a Purchase Price Allocation (PPA), Summit's PP&E is written up by $200 million.
In a stock sale, how does this write-up impact the combined balance sheet's liabilities?
- It has no impact on liabilities as it only affects the asset side of the balance sheet.
- It creates a $200 million account payable to the seller.
- It reduces total debt by $200 million as the assets are more valuable.
- It creates a $50 million Deferred Tax Liability (at 25% tax).
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