Cash-Free Debt-Free
The standard basis on which M&A deals are priced: the Enterprise Value assumes the target is delivered with no cash and no debt at closing.
Also known as: CFDF, Cash and debt free
One-line definition
Cash-free debt-free means the seller keeps cash generated up to closing and repays all debt, so the buyer pays a clean Enterprise Value.
Mechanics
Equity Value = Enterprise Value − Net Debt at closing
Any cash left in the business at completion is offset against debt, or treated as a price adjustment via completion accounts or a locked box.
Why it matters to TS
Defining what counts as "cash" and "debt" is a major negotiation. TS teams build detailed schedules identifying every item — restricted cash, overdrafts, lease liabilities, pensions, etc.
Related terms
Net Debt
The gap between Enterprise Value and Equity Value in a deal — gross debt minus cash, plus a long list of debt-like items.
Enterprise Value (EV)
The total value of a business, representing what a buyer pays for 100% of the company on a cash-free, debt-free basis.
Equity Value
The value of the shareholders' stake in a business, derived by subtracting net debt from enterprise value.
Completion Accounts
A post-closing price adjustment mechanism where the actual balance sheet at the completion date is compared against an agreed target to determine a price true-up.