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If the absolute tax take from firms remained unchanged, then their enterprise value (debt plus equity) would be unaffected.
The worthless companies hypothesis also demonstrates the risk of assuming that assets always equal liabilities plus equity.
The accounting equation, assets equal liabilities plus equity, suggests that the debt and equity of a worthless company should also have no value.
The average debt ratio (long-term debt as a percentage of debt plus equity) for public companies prior to a buyout is about 20%.
Prebuyout shareholders earn average market-adjusted premiums of 38%, while the total return to capital (debt plus equity) for buyout investors is 42%.
Digg, the "social news" site which was once the poster child for Web 2.0 and valued at up to $175m, has been sold to New York technology development company Betaworks for just $500,000£324,00000) in cash plus equity.
Similar(37)
By the company's own reckoning, 14 of WisdomTree's current 61 ETFs are pure beta-plus equity plays, although many of its other products contain elements of fundamental weighting.
For example, if each €15 million-plus equity round qualified for a €5 million matching government debt instrument priced at a very low interest rate, overnight it will increase the larger round market, and leverage even greater gains for late-stage investors, in turn bringing more capital to Series C and later rounds.
But instead of putting your $300,000-plus of equity from the old house into the new one, you once again put down only 20%, or $100,000.
At the retail investor level, they expect this strategy to result in a 7% dividend yield plus growth in equity over time.
Elena Bongiovanni of Equity Plus Mortgage represented the buyer.
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