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Definition
Enterprise value is the market value of a company’s equity plus its net debt (and other claims), representing the cost to acquire the entire business regardless of how it is financed.
In plain terms
Buying a company means taking on its debts too. EV captures that, so two firms with the same equity value but different debt have different real prices.
Why it matters for your company
EV is the basis for multiples like EV/EBITDA used to price acquisitions and management buyouts. Understanding it helps you judge whether an offer is fair. See management buyout.
Related reading
Net debt
Net debt is total borrowings minus cash — the debt figure that actually matters, because £1m of loans against…
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EBITDA (earnings before interest, tax, depreciation and amortisation) is a measure of a business's underlying…
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Valuation
A valuation is a professional estimate of what an asset or business is worth — the figure lenders, buyers and…
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Management buyout (MBO)
A management buyout is where the existing management team buys the business — a common founder exit, funded…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.