# Enterprise Value

The value of the whole business — equity plus net debt.

**Acronym:** EV

Enterprise value (EV) is the value of a business as a whole, independent of how it is financed: equity value plus net debt (and typically minus cash). It represents what it would cost to acquire the entire operating enterprise, and it is the figure a valuation multiple is usually applied to.

Enterprise value is easily confused with equity value, but leverage makes them very different numbers on the same company. Enterprise value describes the whole business; equity value is only the portion the owners keep after debt is settled. Quoting one when the other is meant materially misstates a return, especially for a highly leveraged asset.

### Commonly confused

Equity value. Enterprise value is the whole business (equity plus net debt); equity value is what owners keep after debt. Leverage makes them very different numbers.

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