MF Case study: Accounting NCI/Investment assocaites

Hi monkeys

Just came across an interesting accounting case study incl. NCI/minority and treatment of investment associates for EV/EqV bridge and valuation metrics

Assuming:

  • Consolidated EBITDA: 130m (o/w EBITDA generated from minority shareholders having 49%)
  • Associate investments income: 10m
  • Minority interest: 5m
  • Net income: 66.5m (already deduction of minority interest).  

B/S entry:

  • Associates: 100m
  • equity attributable to minority shareholders:: 60m

Case study is asking: calculating relevant valuation multiple for NCI + associates using BV on B/S.

Would it be:

  • Associates:  100/10=10x
  • NCI: 60/5=12x?

And for the EV/EqV bridge: deduct the associate investment of 10m (form of cash/non-core?) and add-up and NCI (BV) of 60m to the bridge?

EV/EBITDA would be: EV (incl. 60m NCI, deduct 100m) / 130m
P/E : Market cap (share price x option) / 66.5m -> no deduction needed as NI has been already adjusted above

What about the 13m EBITDA , bit confused here.

Many thanks!

Comments (2)

4d
Hellogarden, what's your opinion? Comment below:

Fix: 

  • Consolidated EBITDA: 130m (o/w 13m EBITDA generated from minority shareholders having 49%)

For the NCI valuation - would it be:

- 60m (NCI) / 0.49% (NCI share) =  Market cap of minority 122m
- 5m (NCI income) / 0.49% (NCI share) = 10
-> Multiple: 122/10m? 

1m
Hellogarden, what's your opinion? Comment below:

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