Question of the day
2026-07-22
Define minority interest (noncontrolling interest) and explain why it's ADDED in the EV bridge.
Answer it out loud first — like you would in the room. Then check yourself:
Reveal the model answer
Model answer
Minority/noncontrolling interest (NCI) arises when a parent owns more than 50% but less than 100% of a subsidiary and CONSOLIDATES 100% of that sub's financials (revenue, EBITDA, debt, etc.). NCI on the balance sheet represents the portion of the sub's equity owned by outside shareholders. Because the income statement / EBITDA includes 100% of the sub but equity value only reflects the parent's ownership, you ADD NCI so the numerator (EV) matches the denominator (100% of consolidated EBITDA). Without it, EV/EBITDA would be understated.
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