I know MVIC/Ebitda is used for the market approach of private company valuation, but do any of you guys really know the difference between MVIC and Enterprise Value? Thanks in advance.
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"Value can be considered on three levels: The value of the enterprise before taking into account its cash and debt. The market value of invested capital (MVIC), which is equal to enterprise value plus cash. equity value, which is MVIC less debt." -Orchard Partners Inc.
People confuse this all the time (esp on WSO). EV is the market value of a firm's operations (op assets). MVIC is the market value of a firm's debt + equity (op assets + non op assets). EV + Cash & Non op Assets = MVIC; MVIC - Debt = equity value.
So essentially what you're saying is:
EV = mkt cap + Mkt value of Debt + minority int + mkt value of Pref shares - C&CE
MVIC = mkt value of debt + Mkt Value of Equity
Would you guys say this is correct?
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