From enterprise value to the shareholders’ stake

Identify the workstream

M&A and capital-raising work centres on companies, transactions and financing choices. This differs from sales and trading, which centres on markets, clients and positions. Both use financial analysis, but the questions, models and outputs are not interchangeable.

Bridge the values consistently

For a deliberately simplified company, suppose enterprise value is 1,200 million, debt is 300 million and cash is 100 million, with no other bridge adjustments. Equity value is 1,200 − 300 + 100 = 1,000 million. With 100 million diluted shares, the implied value is 10 per share. A real case may require further adjustments and careful treatment of dilution.

Check the forecast before the valuation

Revenue, margins, working capital and investment should connect through the financial statements. Confirm that the balance sheet balances and that cash and financing reconcile. A precisely formatted valuation can still be wrong if the underlying forecast contains inconsistent units, timing or accounting.

Present a range and a rationale

Use a fictional transaction to compare a cash-flow valuation with relevant multiples. Show the sensitivity to material assumptions, the financing choices and the unresolved diligence questions. A good case presentation allows a reader to follow the argument back to the source numbers.

A learning example, not a market recommendation. Work through the assumptions before applying any model.