Enterprise Value
Investment Banking glossary · Valuation & Implied Share Price Mechanics
Definition
Total value of a company's core operating business, capturing claims of all capital providers net of non-operating cash: EV = Equity Value + Total Debt + Preferred Stock + NCI - Cash & Equivalents. EV is the correct numerator for unlevered multiples (EV/EBITDA, EV/EBIT, EV/Revenue).
Enterprise Value in plain English
Enterprise Value answers: what would it really cost to own this company's business outright? It's not just the price of the stock — you also have to take on the company's debts, plus any preferred stock and slices owned by minority partners (NCI), and then you subtract the cash it already has (because that cash is basically a rebate on your purchase). Picture buying a house with a $300,000 mortgage still on it and $20,000 cash left in a drawer inside: the true cost to control it is the sticker price plus the mortgage you inherit, minus the cash you find. EV is the honest "whole business" number, so it's used with measures like EV/EBITDA that describe the business regardless of who lent it money.
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