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Part B: Recall that in the Congoleum case assignment, the original debt ratio of the LBO was approximately 86%. However, the effective debt ratio was
Part B: Recall that in the Congoleum case assignment, the original debt ratio of the LBO was approximately 86%. However, the effective debt ratio was much lower. Briefly explain how the deal was structured to lower its effective debt ratio and whether today's LBO deals still use similar financing strategies. Part C: Briefly discuss the reasons behind Dollar Tree's success in acquiring Family Dollar despite its lower bid. Do you think Dollar Tree over-or underestimated the deal? Support your answer by referencing the FCFF formula: FCFF = EBIT (1-t) + Dep - Capex - Change in NWC + Extras Part B: Recall that in the Congoleum case assignment, the original debt ratio of the LBO was approximately 86%. However, the effective debt ratio was much lower. Briefly explain how the deal was structured to lower its effective debt ratio and whether today's LBO deals still use similar financing strategies. Part C: Briefly discuss the reasons behind Dollar Tree's success in acquiring Family Dollar despite its lower bid. Do you think Dollar Tree over-or underestimated the deal? Support your answer by referencing the FCFF formula: FCFF = EBIT (1-t) + Dep - Capex - Change in NWC + Extras
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