Enterprise & Equity Value
If a buyer is acquiring a company, do they 'pay' enterprise value or equity value - and how does the deal actually settle?
Model answer
Most M&A is quoted and negotiated on an enterprise value basis (e.g., 'we paid 10x EBITDA'), because EV reflects the value of the operating business independent of how it's financed. But cash…
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More from Enterprise & Equity Value
- What's the difference between enterprise value and equity value?
- Why do you subtract cash when going from equity value to enterprise value?
- Why is enterprise value capital-structure neutral but equity value is not?
- A company issues $100 of new debt and holds the cash on its balance sheet. What happens to EV and equity value?
- Which valuation multiples pair with enterprise value vs. equity value, and why?
- How do you calculate fully diluted shares?
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