Equity value is the portion of a company’s total value that belongs to equity holders—founders, employees, and investors—after satisfying net debt and certain closing adjustments.

How it works

From enterprise value:

Equity value ≈ EV − net debt ± other adjustments

In venture, equity value at exit rarely splits pro rata by ownership percentage. The liquidation waterfall pays preferred holders their preferences and participation first; common (founders/employees) receives the remainder—if any.

Example: $100M EV acquisition, zero net debt → $100M equity value. Series A with 1× non-participating preference holding 40% might choose $40M or convert to common—waterfall math determines founder outcome.

Private company 409A valuations estimate equity value per share for option pricing—distinct from last round post-money, which reflects one preferred class’s negotiated price.

Why it matters

• Founders: Model exit scenarios at multiple EV points with full waterfall—your 30% common stake is not 30% of EV if preferences stack.
• Investors: Preferred equity value includes liquidation preference floor; common equity value is residual upside.
• Secondaries: Secondary price per share reflects negotiated equity value split, often at discount to last primary.

Common mistake

Using post-money valuation from fundraising as current equity value for all classes. Last round price usually applies to preferred; common may be worth far less on a non-participating stack until exit clears preferences.

Related ideas

• Enterprise Value — operating value including debt
• Enterprise Value Bridge — EV to per-class proceeds
• Liquidation preference — priority on equity value
• 409A — fair market equity value for options