---
title: "What Is Enterprise Value?"
term: "Enterprise Value"
description: "Enterprise value (EV) is the total value of a company's operations—equity value plus net debt—representing what a buyer effectively pays for the whole business."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/enterprise-value
---

# What Is Enterprise Value?

> Enterprise value (EV) is the total value of a company's operations—equity value plus net debt—representing what a buyer effectively pays for the whole business.

**Enterprise value** (EV) measures the value of a company's core business to all capital providers—equity holders and debt holders combined.

## How it works

Standard formula:

**Enterprise value = equity value + total debt − cash and equivalents**

Equity value is what shareholders would receive if debt were paid from sale proceeds (simplified). A company with $100M equity value, $20M debt, and $10M cash has EV of roughly $110M.

Acquirers quote EV because they care about operating worth independent of how the cap table is levered. Public market EV uses market cap plus net debt; private deals derive EV from negotiation or multiples on [EBITDA](/glossary/ebitda).

Venture startups often have minimal debt and EV ≈ equity value until venture debt, revenue-based financing, or late-stage leverage appears.

## Why it matters

- **Founders:** Headline "$500M acquisition" may be EV; your proceeds depend on liquidation stack, debt paydown, and transaction fees—see [equity value](/glossary/equity-value).
- **Investors:** Compare deals across capital structures using EV/EBITDA or EV/revenue.
- **Lenders:** Covenants reference EBITDA and sometimes EV in restructurings.

## Common mistake

Using pre-money valuation from a VC round as enterprise value. VC valuations are equity value for a specific share class context—they ignore net debt and are not M&A EV without adjustment.

## Related ideas

- [Equity Value](/glossary/equity-value) — value to shareholders after net debt
- [Enterprise Value Bridge](/glossary/enterprise-value-bridge) — walk from EV to equity
- [Enterprise Value to EBITDA](/glossary/enterprise-value-to-ebitda) — common multiple
- Net debt — debt minus cash

## FAQ

### What is Enterprise Value in simple terms?

What the business is worth to an acquirer including debt—like buying a house plus assuming the mortgage. Equity value is what's left for shareholders after paying off net debt.

### Why does Enterprise Value matter?

M&A and PE quotes often use EV and EV/EBITDA multiples. Founders with venture debt must know equity proceeds shrink when net debt is high even if headline EV looks strong.


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Source: https://venturecapitaltracker.com/glossary/enterprise-value