easy · Private Equity accounting-flow
In an LBO model, if PIK interest is capitalized, how does it affect the 'Equity Plug' s & Uses table at entry?
- It reduces the purchase price of the target company.
- It has no direct impact on the Sources & Uses table at entry.
- It decreases the equity check because it is a source of financing.
- It increases the required sponsor equity check because it is a closing cost.
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