A question about Enterprise Value and Market Cap
Im sorry if this isnt the right forum to post, but im not sure where to post this question.
So from my understanding a market cap is a price you need to pay to the current shareholders of a company to be able to acquire it. Enterprise value on the other hand is a price you need to pay to aacquire it.
But EV has debt in its equation, so do we pay the 'debt part' of EV to the previous shareholders or to the debtholders? If we pay the 'debt part' to the prebious shareholders then how can EV be comparable to market cap?
Sorry if this question is too basic (stupid), but it really boggles my mind. Thanks!
either or, the debt becomes part of ur balance sheet. you can either refi it or pay it off
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