What would shareholders get at 9× EBITDA?
Give enterprise value, total equity value and equity value per share.
The question
Alder Metering earns $15m in normalized EBITDA. Apply a 9× multiple. It has $35m of debt, $10m of excess cash and 10m diluted shares.
“Give enterprise value, total equity value and equity value per share.”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Choose your approach
What would you do here? Open the move you’d make.
Add debt and subtract cash from enterprise value.
Tempting, but it misses something. That moves in the wrong direction for the bridge from enterprise value to equity.
Multiply EBITDA by 9, subtract debt and add excess cash.
The strong move. Debt has a claim on enterprise value. Excess cash adds value for equity holders.
See how a strong candidate says it
“$135m enterprise value less $35m debt plus $10m excess cash gives $110m equity, or $11 per diluted share.”
Why it works: Debt has a claim on enterprise value. Excess cash adds value for equity holders.
Step 2: Value the operations
What would you do here? Open the move you’d make.
Apply the multiple to EBITDA.
The strong move. 9 × $15m gives $135m of enterprise value.
Apply the multiple to cash.
Tempting, but it misses something. The case gives an EBITDA multiple.
See how a strong candidate says it
“9 × $15m gives $135m of enterprise value.”
Why it works: The case gives an EBITDA multiple.
Step 3: Allocate value to shareholders
What would you do here? Open the move you’d make.
Subtract debt and add excess cash.
The strong move. $135m less $35m of debt plus $10m of excess cash gives $110m of common equity.
Subtract both debt and cash.
Tempting, but it misses something. Cash is an asset outside the operating valuation.
See how a strong candidate says it
“$135m less $35m of debt plus $10m of excess cash gives $110m of common equity.”
Why it works: Cash is an asset outside the operating valuation.
Step 4: Get to a per-share figure
What would you do here? Open the move you’d make.
Divide equity value by diluted shares.
The strong move. $110m divided by 10m diluted shares gives $11 per share.
Divide enterprise value by diluted shares.
Tempting, but it misses something. The price per common share comes from common equity value.
See how a strong candidate says it
“$110m divided by 10m diluted shares gives $11 per share.”
Why it works: The price per common share comes from common equity value.
The answer, in short
- Decision
- $135m enterprise value less $35m debt plus $10m excess cash gives $110m equity, or $11 per diluted share.
- Because
- Debt has a claim on enterprise value. Excess cash adds value for equity holders.
- What would change it
- A change in normalized EBITDA or the selected multiple would change the valuation.
Common traps
- Add debt and subtract cash from enterprise value.
Check your answer
- Did I state which values and assumptions I used?
- Value the operations?
- Allocate value to shareholders?
- Get to a per-share figure?
Last reviewed Nov 10, 2026