Market capitalisation plus net debt (total debt minus cash) — the theoretical takeover price of a business, representing the total cost to acquire all cash flows.
Deeper Explanation
Enterprise Value is the capital-structure-neutral measure of a company's total value. Two companies with identical market caps but different debt levels have different EVs — the more indebted company would cost more to acquire in full. This is why EV-based multiples (EV/EBITDA, EV/EBIT, EV/FCF) are more comparable across companies with different capital structures than equity-only multiples (P/E, P/B). An acquirer paying EV acquires both the business's earning power and its debt obligations — which is the complete economic picture of what is being purchased.
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