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.
Also known as: EV, Total firm value
One-line definition
Enterprise Value is the price of the whole business — what an acquirer pays regardless of how it is financed.
Formula
EV = Equity Value + Net Debt
= EBITDA × Multiple (from a trading or transaction comps perspective)
Why it's deal-neutral
EV strips out capital structure, making businesses comparable regardless of leverage. Two identical businesses — one with debt, one debt-free — have the same EV.
Related terms
Equity Value
The value of the shareholders' stake in a business, derived by subtracting net debt from enterprise value.
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.
EV/EBITDA Multiple
The ratio of Enterprise Value to EBITDA, the primary valuation metric used to price businesses in M&A transactions.
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.