medium · Investment Banking implied-share-price
When a company owns a non-controlling stake (20% to 50%) in another company, how is this 'Equity Investment' usually treated in the Enterprise Value bridge?
- It is added to Equity Value because it represents an additional operating asset that the company owns
- It is subtracted from Equity Value because its financial results are not consolidated into the company's EBITDA.
- It is treated exactly like Cash and added back in order to calculate the total effective cost of the acquisition
- It is ignored entirely as it is considered a non-cash item that only affects the balance sheet, not the valuation multiples
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