Creating a proforma balance sheet for an M&A deal

One of the first steps involving modelling an acquisition is to observe how the balance sheet of the resulting 'merged' entity looks like. This is often a starting point for estimating future debt covenants and capacity in the combine entity. ​ I've kept the structure of the calculations simple in this illustrative example. You can of course overlay additional elements from the deal such as transaction fees and different debt tranches. To see a slightly more detailed version, click here.