When calculating market capitalization for trading comps analysis, do bankers use basic (actual) shares outstanding or diluted shares outstanding? I heard diluted is often used because the market share price also accounts for potentially dilutive securities as well, but just wanted to confirm. Thanks in advance guys.
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in an M&A context you're also interested in EV based ratios and not just equity ratios so taking diluted allows you to account for the subtleties of their capital structure.
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