Valuation Terms

Equity Value

What the seller may actually receive for the ownership after adjusting for debt, cash, and other items. Why it matters: Equity value is closer to the seller’s real economic outcome, so owners should ask advisors to bridge enterprise value to expected proceeds.

Related terms

Enterprise Value

The total value of the business itself before adjusting for cash, debt, and working capital. Why it matters: This is often the headline price in an LOI, but it is not always the amount the seller takes home because debt, cash, working capital, taxes, and fees still need to be handled.

Seller

The current business owner who wants to sell the business. Why it matters: The seller is not just handing over ownership; they are also proving the business, answering diligence requests, negotiating risk allocation, and often helping with transition.

More from Valuation Terms

Add-Backs Adjusted EBITDA CapEx Cash Flow EBITDA Enterprise Value Free Cash Flow Gross Margin Gross Profit Multiple Net Income Net Working Capital

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