Enterprise & Equity Value
Parent: market cap $900m, debt $300m, cash $100m, consolidated EBITDA $200m. It owns 75% of a consolidated sub with $80m of that EBITDA; sub peers trade at 10x EV/EBITDA; sub has no debt or cash; book NCI is $50m. Compare EV/EBITDA using book vs market NCI.
Model answer
Market value of the NCI: sub's implied EV = 80 x 10 = $800m; with no net debt that's also its equity value, so the 25% outside stake is worth $200m. Book-based EV = 900 + 300 - 100 + 50 = $1,150m ->…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 2,300+ — or go Pro for unlimited reps.
Pro unlocks every model answer — $19.99/mo.
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?
Try the real thing
1 / 3M&A & Merger Models
What makes an acquisition accretive or dilutive to EPS?
Superday coming up? Take the cheat sheet.
The technicals and stories to have cold before you walk in — free, one email, no mailing list.
Free tier: 20 cards + 10 daily reps + ALL drills — no credit card required.