# Equity Value

What the owners keep after debt — enterprise value minus net debt.

Equity value is the portion of a business's value that belongs to its owners: enterprise value minus net debt. It is what shareholders actually keep, and in a private-equity return it is the number the fund's own capital is measured against.

Equity value and enterprise value describe the same company but answer different questions, and leverage drives them apart. A business can grow its enterprise value modestly while its equity value multiplies, because debt paydown transfers value from lenders to owners over the hold. Treating the two as interchangeable obscures how much of a return came from operating performance versus financial structure.

### Commonly confused

Enterprise value. Equity value is what owners keep after debt; enterprise value is the whole business. Leverage makes the two very different numbers on the same company.

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