Interview question minority interest
What is the treatment of minority interest in terms of a LBO context?
- What are the changes in S&U and PF adjustments?
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If I remember correctly each minority share counts as three-fifths of a normal share...
Isn't it treated in proportion to the % owned? You should add the portion of the sub that the company does not own back to EV to more accurately reflect the transaction. Otherwise, you'll end up with higher sales and EBITDA (from the contribution of the sub) and an EV that doesn't include the value of that interest.
You could also go about trying to take out the subs financial contributions to Sales and flowing through to EBITDA (or whatever OI measure you are using), but it seems much more difficult.
See: http://en.wikipedia.org/wiki/Three-Fifths_Compromise
That went right over my head. Damn 3rd Grade U.S. History.
Holy sh*t Cruncharoo that was gold.
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