medium · Investment Banking implied-share-price
What does Enterprise Value theoretically represent to a potential acquirer?
- The sum of all the company's projected future net income, each one discounted back to the present using the cost of equity.
- The net cost of acquiring the business operations, assuming the target's debt is refinanced and its cash is used to offset the price.
- The maximum amount of debt a company's lenders will allow it to carry, based on the appraised value of its current balance-sheet assets today.
- The dividend yield that equity investors expect to receive over the next twelve months, expressed as a percentage of the current market share price.
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