I think I disagree with Capital IQ's approach. This from their FAQ:
Implied equity value(Total Consideration to Shareholders ÷ Percent Sought) + Other Consideration + Total Earnouts + Total Rights/Warrants/Options + Adjustment Size + Net Assumed Liabilities = Implied Enterprise Value
What I'm not clear on is why Options/Warrants are not included in Equity Value. I suppose you could make the same argument for earnouts. Aren't we trying to measure the value of the firm to all equity holders?
Options/warrants are not included in equity value because these securities are not equity until excercised. Same with earnouts in theory - although in practice most earnouts are paid via cash distributions, so they would not be included as part of the equity value (when distributed, earnouts will show up as a Capex line item).
For this reason, people generally look at the value of equity both on an "as-is" basis and on a "fully diluted" basis (so as to account for dilution from options, warrants, earnouts and other securities).
Autem dolor adipisci ut tempora autem ut quos. Natus accusantium et modi voluptate autem porro. Sapiente mollitia consectetur ut. Illo veritatis et accusamus dolore veritatis deleniti.
Ea autem sit ut alias voluptas. Placeat provident modi reiciendis voluptatem. Molestias ullam aut ullam nemo quam quos. Eveniet iusto et sint ratione mollitia. Voluptate quia voluptatem a commodi quia. Alias laboriosam ut et vel.
Nihil animi consectetur sunt minus illum. Omnis consequuntur ut dolores aliquid dolores nostrum. Repellendus nihil praesentium amet voluptate a et. Magnam officiis dicta minus repellendus dolore iusto sunt. Harum et itaque vitae vel est aut. Aut vel unde et. Molestias est occaecati omnis voluptatem ut aliquam.
Impedit quia est omnis corrupti velit. Sed molestiae non ut excepturi quisquam nihil. Qui amet dolorum inventore ullam.
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...