Why is minority interest used in the EV equation?

Minority interest is included in the enterprise value (EV) calculation to allow for accurate comparisons between companies that may have different ownership structures. When assessing a company's total value, it’s essential to account for interests that do not belong to the majority shareholders, especially in scenarios where a company owns less than 100% of its subsidiaries. By adjusting for minority interests, analysts provide a clearer picture of a company's total value, thus enabling better comparisons with other firms that might have varying ownership stakes in their subsidiaries. This ensures that investors can make informed decisions based on a consistent valuation approach across different companies.