hard · Investment Banking

Why are unfunded pension obligations added to the Enterprise Value when bridging from Equity Value?

1. Because the market capitalization of a company automatically includes the value of its employees' pensions.
2. To balance the DCF since pension expenses are already subtracted from Revenue.
3. They represent a senior, debt-like claim on the company's operating cash flows that reduces the value available to equity holders.
4. Because they are considered a current asset that provides a tax shield for future EBITDA.

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