Enterprise & Equity Value
Your DCF spits out enterprise value, and you bridge to equity value. When you divide by TSM diluted shares to get a per-share value, there's a hidden circularity. What is it and how do you handle it?
Model answer
TSM dilution depends on the share price you assume - but the price is exactly what you're solving for. Strictly, options should be evaluated at your IMPLIED per-share value, not the current market…
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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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