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Case StudiesEquity Value
Equity value is a market-based measure of the equity value of a firm. It accounts for all the ownership interest in a firm including the value of unexercised stock options and securities convertible to equity.
Equity value differs from market capitalization in that it incorporates all equity interests in a firm whereas market capitalization only reflects those common shares currently outstanding. It also reflects any outstanding debt whereas the market capitalization is a grossed up value including all debt outstanding. In the private equity and mezzanine debt world, equity value is usually measured as a multiple of the company’s EBITDA.
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From Our Blogs
Acquisition financing should only require a personal guarantee under a very narrow set of circumstances. Often when buyers get desperate to raise acquisition financing, they […]
The eternal tension in acquisition structuring is balancing operational liquidity with leverage levels. Buyers often invade the operational debt capacity of a business to fund […]
Asset based lenders require collateral in the form of receivables or inventory. Despite borrowers having strong cash flow leverage metrics, they are confined to a […]
Earn-outs are used by buyers to plug the valuation gap. Sellers want more for their business and the buyer cannot afford to provide cash, so […]
The easiest way to differentiate between bridge loans and acquisition financing is by their maturity date. Bridge loans are very short term, usually 1 year […]
Mezzanine structures are built upon revenue visibility and cash flow stability. When a company knows for certain that revenue is showing up every year at […]
Lenders are conservative and use a number of protocols to test the business risk of their lending applicants. This is especially true for mezzanine debt […]
Financial Models contain tea leaves about your financing chances with mezzanine lenders. There are several things to be mindful of when constructing the model, so […]
Mezzanine lenders are expert sleuths at exposing fancy financial engineering in deals. It happens very quickly almost before the investment banker is finished with the […]
While profitability is great to have and certainly a key criterion, it alone does not lead to a successful mezzanine debt raise. Profitable companies can […]