Financing M&A
Reduced merger and acquisition activity in the packaging sector reflects the effects of the credit crunch and the global recession.
According to Weil, the capital structure of an acquisition usually consists of:
• Senior debt—This is the least expensive and most secure source of financing in the capital structure. The amount of senior debt that would be available to finance a transaction is subject to meeting certain credit criteria such as interest coverage, fixed charge. and debt to EBITDA (earnings before interest, taxes, depreciation, and amortization). Senior lenders also examine the value of the acquisition’s assets.
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