Hi John,
From my understanding, using FCFF valuation method if a firm takes over debt from acquiring a company the value of the firm ( debt + equity) then we need to deduct the value of debt to calculate value attributable to the shareholders.
However, using FCFF valuation method if a business unit is being unbundled, the value of the business is its Pv of cash flows which is the net value attributable to the Shareholders? Meaning, there will be no debt at all?
Thanks for your time.
Ask the Tutor ACCA AFM
Valuation of business unit
7y ago#1I can't really give you a rule - it depends on exactly what is in the question.
However, if there is no debt, then yes - the PV will be the value for the shareholders.
Sign in to reply to this topic.