medium · Investment Banking implied-share-price
To bridge from Equity Value to Enterprise Value, why is Cash subtracted?
- It is a financing item that raises the overall risk profile of the acquired business
- It generates interest income that is already fully captured within the valuation multiples used
- It represents a senior claim that must be paid off before equity holders can receive any value
- It is considered a non-operating asset that an acquirer could use to offset the purchase price
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