What happens to enterprise value when a company sells its minority interest?

My initial thought is that when a company sells its minority interest, obviously the minority interest goes down, if the company is receiving cash for it, then the net debt goes down; if the market is pricing in the lost of net income, then the equity value also go down. Then that means the enterprise value goes down THAT much from a sale of minority interest?? Am I missing something? Thanks guys.

 
Best Response

How does one sell minority interest? The exact definition of minority interest is the portion of a subsidiary not owned by the majority shareholder. I.e. parent company owns 70%, it would record a minority interest for the 30% portion not owned on its liability + equity section of the balance sheet.

Please feel free to enlighten me if I am missing something here.

 

minority interest is recorded when a company acquires a greater than 50% stake in a subsidiary without owning 100% of it. Minority Interest in and of itself cannot be sold. The parent company does not own it. The only way to have this item removed is to either 1) acquire 100% of the subsidiaries securities or 2) reduce ownership in the subsidiary to 50% or less

 

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