Enterprise & Equity Value
Should an underfunded pension be added to enterprise value? What's the standard view and the gotcha?
Model answer
An underfunded pension (and underfunded OPEB) is a debt-like obligation: the company owes future benefits it hasn't funded, similar to a creditor claim. Many practitioners ADD the after-tax unfunded…
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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?
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- Which valuation multiples pair with enterprise value vs. equity value, and why?
- How do you calculate fully diluted shares?
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