Which of the following is NOT a way to create equity value?

Creating equity value typically involves strategies that enhance the worth of a company's equity. The first three options—debt pay down, multiple expansion, and EBITDA or earnings growth—are all mechanisms that can provide ways to increase equity value.

Debt pay down contributes to equity value because it reduces the financial risk and cost of servicing debt, effectively increasing the equity holders’ claim on the remaining assets of the company. As debt is paid off, the firm’s leverage decreases, which can also make the equity more attractive to investors.

Multiple expansion refers to the increase in the valuation multiples (like EV/EBITDA) that investors are willing to pay for a company over time. When multiples expand, it reflects a strong business environment or improved investor sentiment toward a company or sector, thereby creating additional equity value.

EBITDA or earnings growth directly influences a company's profitability, leading to higher cash flows and potentially higher valuations. Increased earnings typically suggest a more valuable company, which translates to greater equity value for shareholders.

In contrast, increased competition generally has the opposite effect. It can lead to price wars, reduced margins, and pressure on market share, all of which can erode a company's profitability and value. Instead of enhancing equity value, increased competition tends to trigger a