Valuation When Acquire <50% of the Company
So how do you get valuation when you acquire less than 50% of the company's equity and no change in ownership happens?
I mean, you can certainly value the 100% company and multiply the EV/Equity Value by % you wanna acquire. But do you need to get Enterprise Value when you only buy a minority stake? Do you need to assume/refinance the existing debt (hence EV is calculated)?
I am confused b/c when you buy 100% of the company, you buy the whole equity and eventually still have to pay for debt (either now or in the future), so you get enterprise value. But what if you only buy 25% of the company?
Thanks!
You always need to value the enterprise first.
Thanks for reply. But what comes after you get the enterprise value?
I'm not sure how usually debt works out when you just buy a portion of the company. We don't assume or refinance debt when we just buy 1 share so you don't have something like "enterprise share price". But when you buy 25% of the company and there are only four investors holding 25% each, how should you handle debt when you determine your purchase equity value and purchase enterprise value?
You would subtract out the debt and then multiply the resulting equity value by 25%.
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