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Enterprise Value Equation

The enterprise value equation that is used for comparable valuation analysis is different from the standard equation for enterprise value. Specifically, the enterprise value equation used for relative valuation includes terms for investments in affiliates and non$-$controlling interest.

Why do we need the terms for non$-$controlling interest and imvestments in affiliates in the enterprise value equation when using EV$/$EBITDA multiples for comparable valuation analysis?

Non$-$controlling interest and investments in affiliates would not be represented in the parent company without these terms.

These terms allow us to remove the mismatch between the numerator and denominator in EV$/$EBITDA multiples.

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These terms are needed since the enterprise value does not reflect the economic interest that the parent company owns in its subsidiaries.

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These terms are needed since fulh $*$ Scooll down for more contrihution from all subsidiaries.

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