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

question 12

Multiple Choice

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

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Definitions:

Duty of Substantial Performance

An obligation requiring a party to perform their contractual duties to such a degree that the essential purpose of the contract is met, even if some minor details are incomplete.

Breach of Contract

A violation of any of the agreed-upon terms and conditions of a binding contract without a lawful excuse.

Conditional

Pertaining to an agreement or provision that becomes effective only when a specific requirement or condition is met.

Breach

Engaging in behavior that breaches or disregards an established regulation, pact, or moral standard.