medium · Investment Banking rx-dcm-ecm
A company is restricted to 4.0x leverage. It currently has $100.0M in EBITDA and $300.0M in Debt. It is considering an acquisition that generates $20.0M in EBITDA and would be funded with $150.0M of new Debt.
Would the combined company be in compliance?
- No, the ratio is 4.5x.
- Yes, the ratio is 3.75x.
- Yes, because the acquisition is accretive to EBITDA.
- No, because total debt exceeds $400.0M.
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