What is the purpose of Debt Comps in merger modeling?

• A. To see debt structures and tranche counts used by similar companies
• B. To forecast revenue growth
• C. To determine tax rate
• D. To value intangible assets

Answer: (A)

Debt comps in merger modeling are about understanding how peers fund themselves. By looking at debt structures and how many tranches peers use, you can benchmark the post‑deal capital stack to market norms. Seeing the mix of debt instruments, seniority, maturities, and coupon levels used by similar companies helps you estimate realistic leverage, interest costs, refinancing risk, and overall debt capacity for the combined entity. This information guides the financing plan for the deal and ensures the model uses debt terms that are credible and consistent with how comparable firms actually structure their debt. It also informs repayment schedules and covenants that could affect risk after the merger. Other aspects like forecasting revenue growth, tax rates, or valuing intangible assets are handled in different parts of the model and serve different purposes.