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Enterprise vs Equity Valuation

Starting from Enterprise Value and deducting market value of debt, should the following also be deducted to determine Equity Value?
1. Unfunded pension obligations (defined benefit) - the fair value of pension assets is lower than actuarial valuation of pension liabilities.
2. Deferred tax liability - (reflected in the books at present value)

I think a good rule of thumb is that it should if you would need to write a check at closing. If you were valuing the company using a discounted cash flow valuation you should be incorporating these items into your future cash flows so deducting them from the enterprise value would be double-counting them. I think you should assume that the market has them included into their valuation too.

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As long as the comps also have these items on their balance sheet the same argument is valid. You could also normalize the comps enterprise value by adding back these items and then removing the subject company’s items to account for any differences.

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