Module II· EV-Equity BridgeIntermediate
Question
How do you treat minority interests (non-controlling interests) in the bridge?
Answer
Mechanics
Minority interests (NCI) are the NCI share of consolidated subsidiaries. Consolidated EBITDA includes 100% of the subsidiary, but the equity value belongs only to the majority. Solution: deduct NCI from EV.
Valuation methods
- Market-value method: `NCI market value ≈ NCI EBITDA × sector multiple` (for listed stakes, use the share market value directly).
- Book-value method (default, when no data): deduct the NCI book value directly from EV.
Deep diveShow more details
Example — NCI mark-to-market at a mid-cap subsidiary
Inputs:
- NCI book value: $50m
- Sector multiple: 9x EV/EBITDA
- NCI EBITDA contribution: $8m
Calculation:
```
NCI market value ≈ NCI EBITDA × sector multiple
= $8 × 9 = $72m → rounded to about $70m (vs. book value $50m)
```
Pitch tip
For large NCIs, a separate working − 'NCI mark-to-market $70m vs. book $50m, reflecting sector-multiple uplift.'