Free tool
Enterprise Value Calculator
Enterprise value is what the whole business is worth before its capital structure; equity value is what the shares are worth after it. The bridge between them is debt, preference shares, minority interests and cash. Enter what you know in either direction and the calculator shows the arithmetic — nothing is estimated, and a line you leave blank is treated as zero and said so.
Enterprise value bridge
What the shares are worth, or the price paid for them.
Bank loans, bonds, finance leases, shareholder loans.
Leave blank if none.
Non-controlling stakes in subsidiaries. Leave blank if none.
Cash on the balance sheet, excluding restricted cash.
Enter an equity value to see the bridge.
The formula
Enterprise value = equity value + total debt + preference shares + minority interests − cash and cash equivalents. Rearranged, equity value = enterprise value − debt − preference shares − minority interests + cash. The sum of the debt-like items less cash is net debt, so the bridge is often written as EV = equity value + net debt.
The bridge exists because a buyer of the shares inherits the company's debt and its cash. Two businesses with identical operations and identical enterprise values have different equity values if one is financed with debt and the other with equity. Multiples are quoted on enterprise value precisely so that businesses can be compared regardless of how they are financed; an offer for the shares is made on equity value because that is what changes hands. See how to calculate enterprise value for the worked version.
What goes in each line
Debt-like items (add to equity value)
- Bank loans, overdrafts and bonds, including the current portion
- Finance and, under IFRS 16, lease liabilities — state which convention you are using
- Shareholder and director loans
- Preference shares that behave like debt
- Minority (non-controlling) interests in subsidiaries
- Often also treated as debt-like: unpaid dividends, corporation tax overdue, deferred consideration from a past acquisition, pension deficits
Cash-like items (subtract)
- Cash and cash equivalents on the balance sheet
- Short-term deposits and readily realisable investments
- Not restricted cash, customer deposits held on trust, or cash needed to run the business — the "trapped" cash argument is a negotiation, not a formula
When the bridge matters in a deal
Almost every private-company deal is priced on a cash-free, debt-free basis: the headline price is an enterprise value, and the equity price the seller receives is that figure less net debt at completion, usually with a working-capital adjustment against an agreed target. Disagreements about what counts as debt-like — an accrued bonus, a deferred revenue balance, a lease — are where much of the real negotiation in a share purchase agreement happens, and they are settled in the definitions, not the headline.
For a buyer modelling returns, the bridge is what turns an enterprise value from a valuation into a cheque: the deal economics engine in TrueValue takes the price, the debt the structure adds, the transaction costs and the working capital the business absorbs, and reports the equity actually invested and the return on it.
Frequently asked questions
Why is cash subtracted?
- Because a buyer of the shares receives it. If a company has £1m of cash and no debt, a buyer paying £5m for the shares is paying £4m for the business and £1m for cash they get back on day one. Enterprise value strips that out so the operating business can be valued on its own.
Are leases debt?
- Under IFRS 16 lease liabilities appear on the balance sheet and are commonly treated as debt-like; under FRS 102 (as most UK private companies report) operating leases do not, and many advisers exclude them. State the convention and be consistent between the multiple and the bridge.
What is net debt?
- Total debt plus other debt-like items minus cash and cash-like items. Enterprise value = equity value + net debt. Net debt can be negative when a company holds more cash than debt, in which case equity value exceeds enterprise value.
Is this a valuation?
- No. It converts between two ways of stating a value. For a valuation, run Value My Deal, which uses five methods on your numbers.
Go deeper
- How to calculate enterprise valueThe bridge, worked through.
- EBITDA multiple calculatorThe implied EV/EBITDA multiple behind a price, or the price behind a multiple.
- Value my deal (five-method valuation)The full engine on your numbers, with a deal score. Free, no account.
- How to value a private company in the UKThe methods, the adjustments and the judgement.
- M&A valuation softwareFive methods, deterministic engines, committee-ready reports.