Back to Valuation questions
Name the components of Total Enterprise Value (TEV).
Answer
TEV = Equity Value + Debt + Preferred Stock + Capital Lease Obligations + Unfunded Pension Obligations + Non-Controlling Interest − Cash − NOLs (sometimes). The intuition: anything that's a claim on the operating business gets added; anything that offsets the purchase cost (cash, NOLs) gets subtracted.
Why interviewers ask this
Memorize this list. Bankers often ask 'name 6 components' as a fast filter. Capital leases and unfunded pensions are debt-like obligations — they ARE debt for valuation purposes. NCI is added because consolidated EBITDA includes 100% of the sub. NOLs are treated as a 'tax asset' that reduces the effective purchase cost.
enterprise valuecomponents