Series 79 cheat sheet

Enterprise value = equity market value + total debt + preferred stock + noncontrolling interest − cash and cash equivalents; the measure is capital-structure neutral.

EBITDA = EBIT + depreciation and amortization; unlevered free cash flow = EBIT × (1 − tax rate) + D&A − capital expenditures − increase in net working capital.

WACC = (E/V) × Re + (D/V) × Rd × (1 − t), where Re = risk-free rate + beta × equity risk premium.

Terminal value by perpetuity growth = final-year FCF × (1 + g) ÷ (WACC − g); by exit multiple = terminal-year EBITDA × selected multiple.

Trading comparables use public market multiples (EV/EBITDA, P/E, EV/Sales); precedent transactions embed a control premium and generally produce higher multiples.

Exchange ratio = offer price per target share ÷ acquirer share price; new acquirer shares issued = target shares outstanding × exchange ratio.

A deal is accretive when pro forma EPS exceeds the acquirer's standalone EPS; the pro forma numerator adds after-tax synergies and subtracts after-tax financing costs.

Goodwill = total consideration − fair value of identifiable net assets acquired; goodwill is not amortized but is tested for impairment at least annually.

In an LBO, sources must equal uses; returns are measured by IRR and cash-on-cash multiple, with debt sized to leverage multiples and interest coverage ratios.

Firm commitment: the underwriter buys the entire issue from the issuer and resells it, bearing price risk; best efforts: the underwriter acts as agent and bears no capital risk.

Gross spread = public offering price − proceeds to issuer; a typical IPO spread is about 7%, split into management fee, underwriting fee, and selling concession.

The overallotment (green shoe) option lets the syndicate buy up to 15% of the offering size at the offering price, exercisable for up to 30 days.

IPO lock-up agreements typically run 180 days and bar insiders and pre-IPO holders from selling without the lead underwriter's consent.

Regulation M Rule 101 bars distribution participants from bidding for or buying the subject security during the distribution; Rule 103 permits passive market making and Rule 104 governs stabilization.

Rule 105 prohibits purchasing offering shares to cover a short sale effected within five business days before the pricing of the offering.

Stabilization includes syndicate covering transactions (aftermarket purchases covering an overallotment short) and penalty bids (reclaiming concessions from members whose clients flip shares); both must be disclosed.

Securities Act Section 11 imposes liability for material misstatements in a registration statement; underwriters may raise a due diligence defense by showing a reasonable investigation.

A tombstone advertisement announces an offering; it is not an offer to sell and must satisfy the Rule 134 safe harbor.

Securities Act Section 5 prohibits offers to sell before a registration statement is filed and sales before the effective date; Form S-1 is the general registration form.

Rule 415 shelf registration allows securities to be registered in advance and sold over up to three years; Form S-3 eligibility requires 12 months of reporting and $75 million public float.

A well-known seasoned issuer - $700 million public float or $1 billion of debt sold in the prior three years - may use an automatic shelf registration effective on filing.

Rule 462(b) allows the registered amount to be increased by up to 20% through a post-effective amendment that becomes effective automatically.

Reg D Rule 506(b) permits unlimited accredited investors plus up to 35 non-accredited purchasers and bars general solicitation; Rule 506(c) permits general solicitation if all purchasers are accredited and verified.

Accredited investor: individual income above $200,000 ($300,000 joint) or net worth above $1 million excluding the primary residence; entities with $5 million in investments.

Rule 144: six-month holding period for reporting issuers, one year for non-reporting; affiliates file Form 144 and are limited to the greater of 1% of outstanding shares or four-week average volume per three months.

Rule 144A permits resale of restricted securities to qualified institutional buyers owning at least $100 million in securities, without registration.

Form S-4 registers securities issued in mergers and exchange offers; Form S-8 covers employee benefit plan shares; Form D is filed within 15 days after the first Reg D sale.

Statutory merger, stock purchase, and asset purchase are the three acquisition structures; a reverse triangular merger preserves the target's contracts, licenses, and NOLs.

Section 368(a) defines tax-free reorganizations (Types A, B, C, D, E, F, G); qualification requires continuity of interest and continuity of business enterprise.

Section 338(h)(10) treats a qualifying stock purchase as an asset purchase, giving the buyer a stepped-up tax basis.

Schedule 13D must be filed within 10 days after acquiring more than 5% of a class; passive institutional holders may use Schedule 13G.

HSR premerger notification is required when the size-of-transaction exceeds the annually adjusted threshold (about $120 million) and the size-of-person test is met; the initial wait is 30 days, or 15 days for a cash tender offer.

Deal protection typically includes a no-shop clause, a fiduciary out, a break-up fee of roughly 2-4% of deal value, and sometimes a go-shop period.

Revlon duties require a board selling control to obtain the best price reasonably available; Unocal requires defensive measures to be reasonable in relation to the threat posed.

A material adverse effect clause lets the acquirer terminate on a durationally significant harm to the target, subject to negotiated carve-outs.

In a cash-free, debt-free deal the price is adjusted for net debt and a working capital peg; goodwill = consideration − fair value of identifiable net assets.

A tender offer must remain open at least 20 business days, and tendering holders may withdraw their shares at any time during the offering period.

Rule 14D-10 (best-price rule) requires every holder to receive the highest consideration paid to any holder during the offer; the all-holders rule requires the offer be open to all holders of the class.

Oversubscribed offers are filled pro rata; the bidder files Schedule TO and the target files Schedule 14D-9 with its recommendation within 10 business days.

An issuer tender offer is governed by Rule 13e-4; a going-private transaction requires Schedule 13E-3 with fairness disclosure.

Section 3(a)(9) exempts an exchange offer in which an issuer swaps its own securities with existing holders and pays no solicitation compensation.

A Chapter 11 petition triggers an automatic stay against collection and litigation; the debtor holds 120 days of exclusivity to file a plan and 180 days to obtain acceptances.

Section 1126(c) acceptance requires two-thirds in amount and more than one-half in number of claims voting in each class; cramdown can confirm a plan over a dissenting class.

A Section 363 sale transfers assets free and clear of liens, often to a stalking-horse bidder whose bid sets the floor and includes a break-up fee and overbid procedures.

A prepackaged plan solicits acceptances before the petition date; a pre-negotiated plan has key creditor support but votes are taken after filing.