equity carve-out (eco) - The Center for Paper Business and Industry ...
equity carve-out (eco) - The Center for Paper Business and Industry ...
equity carve-out (eco) - The Center for Paper Business and Industry ...
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EQUITY CARVE-OUT (ECO)<br />
o<br />
o<br />
Common <strong>equity</strong> is the cheapest yet the largest value distribution in the Enterprise<br />
Valuation of a company with multiple business segments.<br />
ECO gives a corporate parent an opportunity to get <strong>equity</strong> <strong>and</strong> at the same time<br />
increase its market capitalization by virtue of restructuring one of the units as a<br />
<strong>carve</strong>d-<strong>out</strong> entity<br />
TOTAL = 2000<br />
Convertible Securities<br />
200 250<br />
250<br />
Operation D<br />
Corporate<br />
Overhead<br />
1750<br />
*all values in million US$<br />
400<br />
Debt<br />
EXHIBIT 3.<br />
Valuation of an<br />
Enterprise with<br />
Multi-<strong>Business</strong><br />
Segments<br />
350<br />
Operation C<br />
450<br />
Operation B<br />
750*<br />
Operation A<br />
200<br />
1150<br />
Preferred<br />
Stock<br />
Common<br />
Equity Stock<br />
Value of the<br />
Enterprise<br />
Value<br />
Operating Units<br />
Value<br />
Distribution<br />
Source: “Valuation” – Measuring <strong>and</strong> Managing the Value of Companies: McKinsey & Company, Inc.,
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