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M&A cases - Enterprise vs Equity value

Hi - just a clarification about enterprise/equity values and how they apply to M&A cases. When the case is about purchasing the entire company, only the enterprise value should be used (calculated through DCF) but when the case is about buying individual shares as an investment, then equity value is what's relevant (calculated through market cap)?

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Profilbild von majid
am 1. Mai 2019

EV is used to value a company according to a standard that allows you to compare it to other transactions and companies based on fundementals of the business. If you are looking to "buy" a company, that would be equity value.

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Profilbild von Vlad
Vlad
Coach
am 1. Mai 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

Are you talking about consulting interviews or PE interviews? In consulting interviews debt and cash are not considered and thus you are calculating just the "Value" of the company that is a very simplified version of an equity value

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