---
title: "What Is Equity Value?"
term: "Equity Value"
description: "Equity value is the worth attributable to shareholders after paying net debt and transaction adjustments—the money that flows through the cap table waterfall."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/equity-value
---

# What Is Equity Value?

> Equity value is the worth attributable to shareholders after paying net debt and transaction adjustments—the money that flows through the cap table waterfall.

**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](/glossary/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](/glossary/enterprise-value) — operating value including debt
- [Enterprise Value Bridge](/glossary/enterprise-value-bridge) — EV to per-class proceeds
- Liquidation preference — priority on equity value
- 409A — fair market equity value for options

## FAQ

### What is Equity Value in simple terms?

What's left for owners after the company's debts are paid from a sale—split among preferred and common shareholders per the charter.

### Why does Equity Value matter?

Headline acquisition EV does not equal founder payout. Liquidation preferences can absorb most equity value before common sees a dollar.


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