How is the equity value calculated for an M&A transaction when the target company is private?
A)Share price multiplied by shares outstanding
B)Acquirer's price per share multiplied by shares outstanding
C)Enterprise value less assumed/refinanced net debt
D)There is no equity value for a private company

Question

Quizplus · Accepted Answer

In an M&A transaction, the equity value for a private company is typically calculated as the enterprise value less any assumed or refinanced net debt. This is because as a private company, the target's shares are not publicly traded, so there is no share price or acquirer's price per share to use in the calculation. Since enterprise value represents the total value of a company, subtracting out net debt gives the equity value.

How Is the Equity Value Calculated for an M&A Transaction