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- First Step to Final Offer 2/25/25
First Step to Final Offer 2/25/25
Brooks Gammill
February 26, 2025
Your weekly round-up of an M&A deal walkthrough, insightful market news summaries, technical quiz questions, and various internships, events, and diversity programs. A key resource to best prepare yourself for finance recruiting. If someone sent you the newsletter subscribe below!
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TECHNICAL QUESTION OF THE WEEK:
MARKET NEWS
JPMorgan Expands Direct Lending With $50 Billion Commitment
JPMorgan Chase is allocating an additional $50 billion to its direct lending business, reinforcing its push into the fast-growing private credit market. The move positions the bank as a major competitor to private equity firms and alternative asset managers, which have traditionally dominated the space. With institutional investors increasingly seeking non-traditional financing options, JPMorgan aims to capitalize on the demand for flexible lending solutions while diversifying its revenue streams beyond traditional banking.
Source: Reuters
Wall Street Launches ETFs Mimicking Private Equity Strategies
Major financial firms are introducing exchange-traded funds (ETFs) designed to replicate private equity-style investments, offering retail investors exposure to alternative assets without traditional barriers. Funds like LQPE and BUYO aim to track private market strategies, reflecting growing demand for alternative investment vehicles. This trend highlights Wall Street's push to democratize access to private equity-like returns while maintaining liquidity and transparency.
Source: Bloomberg
M&A DEAL OVERVIEW
Blackstone to Acquire Safe Harbor Marinas in $5.65 Billion Deal
Blackstone Infrastructure has agreed to acquire Safe Harbor Marinas in a $5.65 billion transaction, marking a significant expansion in its infrastructure portfolio. Safe Harbor, the largest owner and operator of marinas in the U.S., manages over 130 locations nationwide. The deal underscores Blackstone’s continued investment in real assets with stable cash flows and growth potential, particularly in the recreational boating sector.
Source: Blackstone
ADDITIONAL RESOURCES
LAST WEEK TECHNICAL QUESTION OF THE WEEK ANSWER:
Correct Answer: C, 11% — Company A acquires Company B using 100% Debt. Company B has a purchase P/E multiple of 12x, and Company A has a P / E multiple of 15x. What interest rate on Debt is required to make the deal dilutive? Assume a tax rate of 25%.
Explanation: For the deal to be dilutive, the cost of debt must exceed the earnings yield (E/P) of Company A. Company A’s earnings yield is 1 / 15x = 6.67%, while Company B’s earnings yield is 1 / 12x = 8.33%. Since the acquisition is funded entirely by debt, the after-tax cost of debt must be higher than Company A’s earnings yield for dilution to occur. The after-tax cost of debt is given by Interest Rate × (1 - Tax Rate). Setting this equal to 6.67% and solving for the interest rate, we get 6.67% / (1 - 25%) = 8.89%. Since the deal becomes dilutive at an interest rate above this, the required rate to ensure dilution is 11%.