Enterprise Value; straight to the dome
Sup guys/gals? Hoping a few of you seasoned users could help clear up a few questions I have. Giving a small briefing on these and want to make sure I have them nailed down. Input is greatly appreciated.
As far as my understanding goes, MVIC and BEV are used interchangeably, but technically speaking there is a difference.
Here's what I'm working with:
Debt/Equity
+Any other long-term operating liab. (off balance sheet items)
=MVIC
-Non-op assets
+Non-op Liab.
+Non-controlling interest
=BEV
My first question is:
- When talking about an acquisition price, is this the MVIC we’re looking for? I have heard and read conflicting things on this topic.
currently reading another thread on here that states BEV is the acquisition price under all curcumstances. This is what I thought as well until someone told me differently recently.
I guess my hang up with this is the non-operating asset piece of this equation. Cash for example, would effectively reduce the acq. price by the amount, so technically speaking, removing this non-op asset (excess cash) would take the level of value to BEV. The reason I assumed MVIC might be the acq. price is that an acquiring firm doesn’t necessarily inherently have the power to negotiate non-op assets out of the deal.
- Second question is in regard to the non-op liab., not 100% on the technicalities of this adjustment that’s made to arrive at BEV.
I realize these questions may be pretty granular to some, just want to make sure I’m covering the bases.
There's a Damodaran thread on here that provides some pretty good color on the cash adjustment, especially for trapped cash, can't post the link though.
Thanks in advance.
Qui sit esse voluptatem sed. Omnis nisi laborum perferendis accusamus qui. Voluptas id quas quis vero possimus blanditiis.
Molestiae et commodi ipsa non magnam. Corporis magnam iure dolorum magnam. Eos est omnis architecto quia voluptates. Aut minima omnis id non omnis iure accusantium asperiores. Eligendi aperiam voluptates nobis tenetur ducimus quis amet. Blanditiis beatae vitae quae sit provident. Minima atque est soluta sequi et atque est provident.
Ut et nihil dolor debitis iure molestiae. Est quisquam soluta et. Sit soluta nisi et dolor eveniet quos.
Eaque sint nesciunt cumque maiores incidunt. Laudantium facere rerum architecto impedit. Possimus sequi voluptatibus alias hic blanditiis suscipit omnis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...