It is calculated by taking a company’s enterprise value (that is, what a third party would pay for all of the stock and business assets of the firm) and subtracting the value of any debt or debt equivalents (such as capitalized leases) owed by the company and then adding the value of any excess cash or cash equivalents (such as liquid investment securities) owned by it. In a privately held company, calculating enterprise value is more difficult because the value of the underlying stock of the corporation is not as transparent.Įquity value is the portion of a company’s total value, or its ‘enterprise value,’ that is attributable to its equity investors. Enterprise Versus Equity Value in Small Company M&AĮnterprise value is equivalent to what a third party would pay for all of the stock and business assets of a firm.įor a publicly traded company, calculating enterprise value is fairly straightforward: multiply the current share price by the number of shares outstanding then add outstanding debt.The Difference Between Enterprise Value and Equity Value.In this post, we are going to cover the following items: There are many items one needs to consider when determining enterprise value and equity value. Enterprise value is the value of a company that is available to all of its debt and equity holders while equity value is the portion of enterprise value that’s available just to the equity holders.
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