Module II· EV-Equity BridgeAdvanced
Question
What are the five most common EV-Equity bridge mistakes you must avoid in an interview?
Answer
- Operating leases not added to net debt (post-IFRS 16) → equity value overstated.
- Pension not after-tax → bridge too large, equity too small.
- NCI at book value instead of mark-to-market → distortion at large subsidiary multiples.
- Convertibles handled incorrectly − ITM as debt instead of as equity, or vice versa.
- Excess cash mixed with operating cash → inconsistent bridge.
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Pitch tip
If an MD asks 'Where could you be wrong in the bridge?', list these five. Bonus: 'I also check earn-outs (deducted from EV from the buyer's standpoint) and FX-hedge MTM for cross-border targets.' A top-quartile answer that signals depth of bridge practice.