What is often the primary objective of adding net debt to the purchase price?

Adding net debt to the purchase price is primarily intended to accurately reflect the total financing needed for an acquisition. This approach ensures that both the equity and debt portions of the purchase consideration are accounted for, providing a complete picture of the financial resources required to successfully fund the transaction.

When calculating the total cost of acquisition, it is essential to consider not just the price being paid for the equity of the target company but also any existing debt on the company’s balance sheet that will need to be assumed or refinanced as part of the deal. This holistic view is critical for financial modeling and helps investors and stakeholders understand the total financial commitment involved.

Considering net debt in this way enables a more accurate evaluation of the deal's feasibility and the financial structure post-acquisition, leading to better decision-making and planning.