Purchase price = enterprise value ?

CFA Level II FRA
#1

Hello hardworking fellows,

This question always hassles me a lot. Does purchase price = enterprise value / purchase price = equity portion of the target company?

Different source has different saying :

The purchase price represents the total enterprise value (EV) of a company including the value of its equity and debt. - https://www.divestopedia.com/definition/979/purchase-price

Source 2: In the example of Kaplan notes, purchase price sometimes only means the equity portion of the target company

I want to ask if not any specific statement, such as Company A acquired company B for a sum of XYZ. Does XYZ mean the enterprise value of the company B.

#2

Normally, if it just states the purchase price it will be full debt/equity. It should state “equity” if the buyout is only equity related. Enterprise Value though would be the entire company, as EV = Debt + Equity + minority Interest - Cash

#3

Thank you for your reply. So the answer is, if not specifically stated, the the purchase price = EV ?

#4

Is the purchase price you refer to is the valuation or actual price paid?

if you’re talking about actual price paid, it can be higher, lower, equal, or in between equity & enterprise value