(114) Consider the following Sources & Uses schedule in a merger model (the other details of this particular M&A deal are unimportant): Sources & Uses of Funds Both the acquirer's debt and the target's debt are refinanced in this deal, but only the target's debt can be refinanced in an M&A transaction. S 1,827.3 Sources: Cash Used: Debt Issued: Stock Issued: Assume Target's Debt: Estimated Cost Synergies: Excess Cash Used: Total Sources: 100.0 75.0 211.7 $ 2,214.0 Uses: Equity Purchase Price of Target: Refinance Acquirer's Debt: Refinance Target's Debt: Assume Target's Debt: Integration Costs: One-Time Transaction Fees: Capitalized Financing Fees: Total Uses: $ 1,827.3 97.5 56.1 100.0 50.0 28.3 54.8 $ 2,214.0 The target's debt is both assumed and refinanced, but you can't do both. Debt is either repaid or kept as-is on the Balance Sheet. Click to View Larger Image As you can see, there are some problems with this schedule. Which of the following statements represent PROBLEMS or ERRORS in this schedule? Cost Synergies should not be a Source of Funds because they do not reduce the amount the buyer pays for the seller immediately upon deal close. Integration Costs should not be a Use of Funds because they do not increase the upfront cost of acquiring the seller. Capitalized Transaction Fees should not be a Use of Funds because they are capitalized and added to the Balance Sheet, and are therefore not paid out upfront in cash. (114) Consider the following Sources & Uses schedule in a merger model (the other details of this particular M&A deal are unimportant): Sources & Uses of Funds Both the acquirer's debt and the target's debt are refinanced in this deal, but only the target's debt can be refinanced in an M&A transaction. S 1,827.3 Sources: Cash Used: Debt Issued: Stock Issued: Assume Target's Debt: Estimated Cost Synergies: Excess Cash Used: Total Sources: 100.0 75.0 211.7 $ 2,214.0 Uses: Equity Purchase Price of Target: Refinance Acquirer's Debt: Refinance Target's Debt: Assume Target's Debt: Integration Costs: One-Time Transaction Fees: Capitalized Financing Fees: Total Uses: $ 1,827.3 97.5 56.1 100.0 50.0 28.3 54.8 $ 2,214.0 The target's debt is both assumed and refinanced, but you can't do both. Debt is either repaid or kept as-is on the Balance Sheet. Click to View Larger Image As you can see, there are some problems with this schedule. Which of the following statements represent PROBLEMS or ERRORS in this schedule? Cost Synergies should not be a Source of Funds because they do not reduce the amount the buyer pays for the seller immediately upon deal close. Integration Costs should not be a Use of Funds because they do not increase the upfront cost of acquiring the seller. Capitalized Transaction Fees should not be a Use of Funds because they are capitalized and added to the Balance Sheet, and are therefore not paid out upfront in cash