{ "media_type": "text", "post_content": "How does one typically determine the optimum amount of leverage in a transaction?", "post_id": "60e89916215a5500241bd142", "reply_count": 8, "vote_count": 2, "bowl_id": "58f80826e7a8f40010f604e5", "bowl_name": "M&A - Mergers and Acquisitions Professionals" }

How does one typically determine the optimum amount of leverage in a transaction?

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You talk to multiple lenders and take the offer with the most leverage

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M&A advisory at B4 prior

A number of different things are at play here: what’s the historical and target capital structure of the targetCo., what are the industry comps, how are lenders viewing additional capital raising, what are the general operating trends in the short-medium term, what are the current debt covenants (if any), etc. so basically the main question revolves around whether the senior and other debt tranches will be able to get paid with X% leverage. If the answer is no, this is your highest leverage possible.

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