Module II· EV-Equity BridgeIntermediate
Question
How do you treat equity-method investments (associates) in the bridge?
Answer
Mechanics
Equity-method investments are stakes of 20–50% in a company that is not fully consolidated. EBITDA contains no share of them − so there is no "add" in EBITDA. But the value of the stake belongs to the equity value, which is why associates are added to EV (the opposite of NCI).
Valuation methods
- Mark-to-market: for listed associates, the share value.
- Book value as a proxy for private stakes.
- Multiple-based: associate EBITDA × sector multiple.
Deep diveShow more details
Example — a listed associate
Inputs:
- Book value of associate: $30m
- Listed share value: $80m
Calculation:
```
EV addition (mark-to-market) = $80m (vs. book value $30m)
```
Pitch tip
'Associates $80m at market value (vs. book $30m) − adds to equity value beyond core operating EV.'