Rothschild & Co interview question

How does Equity Investments affect EV?

Interview Answer

Anonymous

19 Jan 2018

Equity Investments do not affect EV. Equity Investments have to be subtracted from the Equity Value to arrive at the EV. Assuming you pay for them in Cash (which you also subtract), the changes would offset each other Cash goes down, Equity Investments rise. If you raise debt to finance the acquisition, the same applies. Changes in debt and equity investments would offset each other.