Cash-Free Debt-Free Transaction

This problem tests whether a candidate understands how acquisition price is negotiated in M&A and how a company’s balance sheet affects the value paid to the seller. It focuses on the distinction between enterprise value and equity value, and on why buyers and sellers adjust for debt and cash when setting transaction terms. Interviewers ask this because it is a core concept in accretion and dilution modeling, and candidates need to know how deal value is defined before they can build a purchase price, financing, and ownership analysis. The key reasoning is to recognize how cash and debt are treated in a standard deal structure and why only certain cash balances are considered part of the transaction economics.