Two different questions
Enterprise value describes the value of operations on the relevant basis, while equity value concerns the shareholders’ interest after relevant financing and other adjustments. Before comparing two figures, check which one each represents and whether the same assumptions are being used.
A simplified bridge
Assume an illustrative enterprise value of £1,200,000, cash of £180,000 and debt of £350,000. With no other adjustments, the equity value is £1,030,000: £1,200,000 + £180,000 − £350,000. The figures are hypothetical and do not represent a market benchmark or a valuation of your company.
Why actual transactions need more detail
Not all cash may be freely available, and debt-like items require careful definition. Working capital adjustments, leases, deferred consideration and other agreed items can matter. Avoid double-counting an item already reflected elsewhere in the valuation or price mechanism.
Equity value is not personal net proceeds
An individual shareholder’s proceeds depend on their holding, rights, transaction structure, payment terms, fees and tax. A company equity value should not be presented as the amount a seller will take home. Personal tax analysis requires a separate, fact-specific assessment.
How to use this in a negotiation
Ask whether the offer is enterprise or equity value, how cash and debt are defined, what normal working capital means and when the amount is measured. Get the definitions documented and reviewed before relying on the headline number.
Your starting checklist.
- Enterprise or equity basis of the offer
- Cash availability and financing balances
- Working capital and debt-like definitions
- Payment terms, fees and separate tax advice
Start with the purpose. Confidential documents can follow through an agreed channel.