What are the primary valuation methodologies, and walk me through the equity-value bridge.

Question

IBPrep · Accepted Answer

The three primary valuation methodologies are: 1) Discounted Cash Flow (DCF), 2) Comparable Companies (trading comps), and 3) Precedent Transactions.

The equity-value bridge connects enterprise value and equity value:

Enterprise Value = Equity Value + Total Debt + Preferred Stock + Minority Interest (NCI) - Cash

Rearranged to go from EV to equity value: Equity Value = Enterprise Value - Total Debt - Preferred Stock - Minority Interest + Cash.

Answer