RE: Ring any bells?16 May 2020 21:15
GG
The enterprise value of a company is the value of the business itself i.e the ability of the entity to generate cash/ profits because of its attributes- IPR, brand, reputation, management, staff, expertise in field etc.
It has value as it takes time, cash , skill and effort to replicate - and EV represents all the time, effort, cash and skill in a monetary figure. Each buyer would use their own method to determine EV depending how it fits in with their company and the enhancement it would give to them. Measured various ways, revenue multiple, Ebitda multiples, or DCF etc. Plus of course a growth factor, if applicable.
So it’s the value of the whole profit generating machine ( which as per above involves many intangible parts).
Market capitalisation takes into account the financial factors - if the company had investments of £30m this would be added to the EV - if it had debt of £30m it would be subtracted from the EV as the buyer is taking over both the asset/ debt element of company.
Bit long winded but hope it explains the difference of the business value and adjustment for assets/ liabilities.
As posted earlier, two identical companies except one owns the facility and other rents of is a better explanation of EV and Mcap
We are 50% asset backed. No other hot / any bio owns any freehold- I’ve checked. To summarise, at this level it lowers the risk massively.
CFs deal last year was deal of the decade. What is it now ?