hard · Private Credit underwriting-credit-analysis

A company has a $10 million net pension deficit. In an Enterprise Value (EV) to Equity Value bridge, how should this deficit be treated?

1. It should be added to Enterprise Value because it represents an investment in employees.
2. It should be treated as an operating expense in EBITDA instead of an adjustment in the EV bridge.
3. It should be treated as debt-like and subtracted from Enterprise Value to reach Equity Value.
4. It should be ignored as it is a non-cash accounting entry.

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