Tips on legal due diligence for debt free cash free valuations

Jun 30, 2011 - by András Lendvai

Enterprise Value and Contractual Purchase Price – Debt Free Cash Free Valuation

The valuation of the target company is a substantial element of any given acquisition transaction. This article showcases the DFCF (debt free cash free) standard for enterprise valuation and the issues raised in the context of transaction contracts. The DFCF valuation is a calculation that ignores how the target company’s business is funded. The DFCF valuation shows the value of the company without accounting for the net cash or net debt held by the company, either on average during the year, or at closing.