Enterprise Value

Let’s now turn our attention to computing the enterprise values of the target and acquirer. To do so, we first need to calculate the number of fully diluted shares outstanding (“FDSO”). We start with the basic shares outstanding found in the last step and add to that the number of share equivalents calculated using the treasury method, which assumes that proceeds from the exercise of in-the-money (“ITM”) options are used to repurchase shares at the current market price. Next, we add the number of shares that would result from the conversion of ITM convertible securities. Multiplying FDSO by the current share price gives equity value, to which we add net debt to yield enterprise value. In order to calculate the Let’s first look at what we did with the options tables. See our section on computing enterprise value for further explanation of these steps.

 

Webinar: The AI Edge in Investment Banking

Presented By LSEG & Macabacus: Learn practical insights about AI’s influence on the future of banking.

Thursday, Oct 30th at 10AM EDT / 2PM GMT.

Note that we have added three columns between the “Average Strike” and “Treasury Shares” columns in the options data tables. For now, do not concern yourself with these columns; we have included them here so that we can more easily compute FDSO for a range of transaction prices (i.e. the price per share paid by the acquirer to the target’s shareholders) in a subsequent step.

Download Template

Download Template

Enterprise Value

Try Macabacus for free to accelerate financial modeling in Excel.

Discover more topics

Webinar: The AI Edge in Investment Banking
Join experts from Macabacus & LSEG to learn practical insights about AI’s influence on the future of banking.
Read more
DCF Excel Template
Elevate your investment analysis with our free DCF model template. Understand discounted cash flow principles and perform accurate valuations in Excel.
Read more
Operating Model Excel Template
Download our free operating model Excel template. Forecast revenue, expenses, and key financial metrics for better decision-making.
Read more
LBO Excel Model
Try LBO modeling with our comprehensive Excel template. Understand key concepts, calculate returns, and gain actionable insights.
Read more