My friend and I were having an argument the other day about which value the acquisition of a company is based on. I said it is based on Enterprise Value, he said it was Terminal Value.
What say you WSO Community? Is the acquisition amount published for a company based on EV or TV?
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EV
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Edit: ignore, it’s obviously EV but my understanding of TEV was a bit off
What are you talking about? I've never seen TEV in the form you have described it. It's typically short for Total Enterprise Value and is equivalent to EV.
From CapIQ:
Implied Enterprise Value/EBITDA: Target company value compared against earnings before interest, taxes, depreciation, and amortization. Same as Implied Enterprise Value/LTM EBITDA and TEV/EBITDA.
Wikipedia, Investopedia, Macabus all concur.
Yep you’re right, we basically only ever call it EV but the handful of times we called it TEV, a more sr guy in our group called it transaction instead of total.
If I remember correctly, your interpretation had an additional component (something about transaction premium?). My guess is that you were thinking about the difference between public comps (potential for transaction premium) and transaction comps (already baked in)?
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