Enterprise & Equity Value
Why do you ADD net debt (and add minority interest, preferred) but SUBTRACT cash when bridging from equity value to enterprise value?
Model answer
EV is meant to represent the cost to acquire the entire operating business free of its capital structure. You add debt, preferred, and minority interest because an acquirer effectively assumes/must…
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More from Enterprise & Equity Value
- What's the difference between enterprise value and equity value?
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- Which valuation multiples pair with enterprise value vs. equity value, and why?
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