hard · Investment Banking implied-share-price
A firm has an Equity Value of $9,000.0 million. It has $2,000.0 million in debt and $600.0 million in cash. The company also reports a Noncontrolling Interest (NCI) of $300.0 million on the balance sheet. However, the NCI is associated with a subsidiary that is not included in the consolidated EBITDA used for the multiple.
How should the EV bridge be adjusted?
- The NCI must always be added to Enterprise Value no matter how the subsidiary's EBITDA is treated.
- The Debt of the unconsolidated subsidiary should also be added back to EV so the two bridges stay aligned.
- The NCI should be subtracted from Enterprise Value instead of added in this situation.
- The NCI should be excluded from the Enterprise Value bridge to maintain consistency with EBITDA.
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