JamesPTJ

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Feb 22, 2017
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Apologies for a financially beginner question, but I have no significant finance background and am wondering about a specific situation regarding the sale of our family firm.

I have a holding Company which owns the business co., the holding company's balance sheet as simplified looks something like this at the moment:

Assets:
Investment in the subsidiary: 700k
Receivables from subsidiary: 290k
Cash: 10 k

Liabilities & Equity:
Shareholders equity: 200k
Retained Earnings: 800k

Ignoring taxes, let's say I sell the subsidiary for 1,5 million, how would the holding company's balance sheet look like?c
If I now were to look for another target to buy, do banks look at my equity capital when granting loans, or is this purely cash based? Could I with an equity capital of, say 2,5 million, get 3x that in bank- and other loans and buy a firm with Enterprise value of 10 million? So in short, is there a ballpark figure on how much can be borrowed with the balanche sheet of the HoldCo after the assumed sale?

Thank you for any comments and assistance!
 

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