I am doing a DCF on a carveout of a public company, and there is about $10M in unfunded pension liabilities. If my DCF is coming out to $300M, would the $10M be a straight deduct on value?

Question

I am doing a DCF on a carveout of a public company, and there is about $10M in unfunded pension liabilities.  If my DCF is coming out to $300M, would the $10M be a straight deduct on value?

anonymous · Answer

The present value of the pension liability is to be deducted from the enterprise value of the target company. In other words: Pension liabilities are interest bearing liabilities and have to be included in your net debt calculations. Cheers

anonymous · Answer

Ok, thanks for the response.  Let's assume this is a private company, and the deal is structured as cash free and debt free (ie enterprise value = equity value).  In this case then, the overall value would be $290 then, right?