Cash & Debt Free

Cash & debt free (CDF) is a widely used premise for calculating the purchase price in corporate transactions. It means that the buyer acquires the company as if it had neither cash nor financial debt. The negotiated enterprise value therefore relates solely to the operating value of the business.

From the enterprise value, the actual equity value to be paid is derived by deducting net financial debt (debt less available cash) and by taking the net working capital into account. This so-called equity bridge is regularly subject to intense negotiation, because the allocation of individual items to cash, debt or working capital significantly affects the purchase price.

The CDF model is often combined with a final purchase price adjustment and thus stands in contrast to the locked box mechanism. In our transaction structuring, we develop a clear and unambiguous equity bridge.