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Debt Pushdown
A financial strategy in which the debt incurred in an acquisition is allocated to the target company's balance sheet, often used in leveraged buyouts.
Implications
A financial strategy where the debt incurred in acquiring a company is transferred to the balance sheet of the acquired company, often used to optimize tax benefits and align the debt with the income it generates.
Example
Example: After acquiring a subsidiary, a parent company executes a debt pushdown by moving the acquisition-related debt to the subsidiary's balance sheet, leveraging the subsidiary's cash flows to service the debt.
Related Terms
Different from simply taking on debt, a pushdown specifically moves the debt to the entity being acquired, which can have tax and financial reporting implications.
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