Enterprise Value
Private Credit glossary · Portfolio Management, Monitoring & Workouts
Definition
Total value of a business to all capital providers: equity + net debt.
Enterprise Value in plain English
Enterprise value answers "what would it cost to buy this entire business outright?" — not just its stock, but the whole operating machine, free of its financing. You take the value of all the owners' shares (equity) and add the company's net debt (what it owes, minus cash it already has), because a buyer inherits those debts and has to pay them off. Think of buying a house listed at 400,000 dollars that still carries a 100,000-dollar mortgage: the true cost of controlling it is really 500,000 dollars, since you take on the loan too. That combined figure is enterprise value.
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