4. Why do you need to add the Noncontrolling Interest to Enterprise Value?

Whenever a company owns over 50% of another company, it is required to report the financial performance of the other company as part of its own performance.

So even though it doesn’t own 100%, it reports 100% of the majority-owned subsidiary’s financial performance.

In keeping with the “apples-to-apples” theme, you must add the Noncontrolling Interest to get to Enterprise Value so that your numerator and denominator both reflect 100% of the majority-owned subsidiary