Module II· EV-Equity BridgeBasic
Question
What is the difference between Enterprise Value (EV) and Equity Value?
Answer
Definitions
- Enterprise Value (EV): the total value of the operating business, belonging to all capital providers
- Equity Value: the value for equity holders, after deducting all debt-like items
Bridge
```
EV = EqV + Net Debt + Minorities + Pension Underfunding − Associates − Excess Cash
```
Multiples convention
- EV-based: EV/EBITDA
- Equity-based: P/E
Why EV is comparable
it is capital-structure-neutral across companies financed differently.