Question of the day
2026-10-12
When calculating equity value, do you use the current share price or the offer/deal price - and does it matter for the EV bridge?
Answer it out loud first — like you would in the room. Then check yourself:
Reveal the model answer
Model answer
It depends on context. For a standalone trading valuation (current market cap), use the current share price times diluted shares. For an M&A transaction, use the offer price per share (which includes the control premium) to get the equity purchase price, then bridge to a transaction/'purchase' enterprise value by adding target net debt. The distinction matters: trading EV reflects the market; transaction EV reflects what an acquirer pays, premium included.
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