Why do you need to add Minority Interest to Enterprise Value?

Answer hidden.


Whenever a company owns over 50% of another company, it is required to report 100% of the financial performance of the subsidiary company.

So even though the company doesn't own 100% of the subsidiary company, it reports 100% of their financial performance. For example, if Company A owns 51% of Company B, Company A would include 100% of Company B's financial performance such as their EBITDA along with theirs.

In order to compare apples-to-apples, you must add Minority Interest to get to Enterprise Value so that your numerator and denominator both reflect 100% of the majority-owned subsidiary.