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Dear Sir,
I do get confused by which value to use in different scenarios.
When selling or buying an entity, is it the value of equity or the entity that would be considered by the seller/buyer?
Is there anything else you could add that would make it easier to understand the significance of the difference between the two?
Thank you
in addition, when we speak of value of the company, is it the value of the entity or the value of the equity we mean?
Hi,
The value of the entity is the value of all the claims on the company, which are the claims that the debt holders have on the business and those the equity holders have.
We can value the claims of both the debt and equity holders, i.e. the value of debt and the value of equity, and then combine these to get the value of the entity.
Thanks
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