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Enterprise Value

Definition

Enterprise value (EV) is a measure of a company's total value, calculated as market capitalization (equity value) plus total debt minus cash and cash equivalents. It represents the theoretical price to acquire the entire business and is the standard metric used to define market segments and compare acquisition targets.

Context

Enterprise value is the primary metric used to define market segments in Deal Sourcery discussions. Chris Reilly describes VRA Partners' focus as the lower middle market, covering enterprise values up to approximately $350M in Ep. 23. EV is also the basis for valuation multiples (e.g., EV/EBITDA) that buyers and bankers use to price transactions and benchmark opportunities.