Enterprise Value Assessment: How Advisors Measure What a Business Is Really Worth

When an owner asks, “What is my business worth?” they’re rarely asking for just a ballpark number.

• What would a buyer actually pay?
• How does debt, cash, and structure change the price?
• What can I do to increase that number before I exit?

That’s where an enterprise value assessment comes in.

Instead of looking only at equity value or a rule-of-thumb multiple, enterprise value (EV) gives a more complete view of the total value of the business as an acquisition target, including debt and cash.

For advisors and firms building repeatable exit planning services, understanding EV (and how to explain it simply) is non-negotiable.

What Is an Enterprise Value Assessment?

Enterprise value (EV) is a company’s total value, including equity, debt, and cash.

As Investopedia explains, enterprise value measures a company’s total value and is often used as a more comprehensive alternative to market capitalization when valuing a business.

An enterprise value assessment is the process of:

• Calculating enterprise value using standardized inputs
• Interpreting what that number means in the context of a potential sale or transfer
• Using EV-based multiples (like EV/EBITDA) to benchmark against peers
• Highlighting value gaps and risk factors that can be improved before an exit

Instead of “your business is worth 5× EBITDA,” EV lets you say:

“Here’s what a buyer would effectively pay for your business, after taking on debt and getting the benefit of your cash balance—and here’s how we can grow that number.”

That framing is powerful in any exit planning or enterprise value growth engagement.

Enterprise Value Formula (and What Goes Into It)

The core enterprise value formula is:

EV = Market Capitalization + Total Debt – Cash and Cash Equivalents

Where:

• Market capitalization = share price × number of outstanding shares
• Total debt = short-term debt + long-term debt
• Cash and cash equivalents = the most liquid assets on the balance sheet

A more detailed version (common in M&A work) is:

EV = Equity Value + Preferred Shares + Market Value of Debt + Non-controlling Interest – Cash and Cash Equivalents

The Corporate Finance Institute notes that enterprise value looks at the entire market value of the company, including both debt and equity claims, making it a useful proxy for the effective cost of buying a company.

In a private-company context, you’ll usually:

• Use a valuation model or market multiple to estimate equity value
• Add interest-bearing debt
• Subtract excess cash

The output is the enterprise value you can then compare to EBITDA, revenue, or other performance metrics.

Why Enterprise Value Assessments Matter in Exit Planning

For firms doing exit and succession work, an enterprise value assessment does a lot more than produce a neat number.

It helps you:

• Compare companies with different capital structures
• EV normalizes for debt and cash, so two firms with the same earnings but very different leverage are easier to compare.
• Align with how buyers think
• Strategic and financial buyers routinely use EV/EBITDA, EV/Revenue, and similar ratios to screen, compare, and price deals.
• Connect to exit readiness and value maturity
• EV sits naturally alongside frameworks like the five stages of value maturity and your broader exit-readiness checks.
• Make “value gap” conversations tangible
• Instead of debating “is my multiple fair?”, you can show today’s EV, the target EV needed to hit personal and financial goals, and the gap between them.

For owners, EV feels less abstract than a discounted cash flow model and more realistic than a back-of-the-napkin multiple. That’s exactly why it works so well in advisor–client conversations.

Step-by-Step: How to Perform an Enterprise Value Assessment

Here’s a simple, repeatable workflow you can use with clients.

1. Establish the Base Equity Value

For a public company, use market cap:

• Shares outstanding × current share price

For a private company, you’ll typically:

• Apply an appropriate market multiple (e.g., EV/EBITDA or EV/Revenue) using peer data
• Or use an income approach (DCF) to estimate equity value

Document your method—owners will inevitably ask, “How did you get that?”

2. Add Interest-Bearing Debt

Include:

• Bank loans
• Notes payable
• Lines of credit
• Capital leases treated as debt

You’re approximating the market value of debt, but in many mid-market engagements, book value is a practical proxy.

3. Subtract Cash and Cash Equivalents

Identify excess cash:

• Cash not required for normal working capital
• Highly liquid investments (money market funds, T-bills, etc.)

This is the cash a buyer could use immediately to pay down net debt after closing, reducing their effective purchase price.

4. Adjust for Preferred Equity or Minority Interests (If Needed)

For more complex structures:

• Add the value of preferred shares
• Add non-controlling interest if consolidated subsidiaries are in play

For many owner-managed middle-market businesses, you can often note these as “not applicable”—but you should know where they would plug in.

5. Sanity-Check with EV Multiples

Finally, calculate:

• EV/EBITDA (most common)
• EV/Revenue (useful for SaaS and high-growth companies)

Compare those multiples against market price benchmarks. If your client’s EV implies a multiple wildly outside peer ranges, re-check assumptions—or flag the “why” as part of the story.

If you’re already using Maus for planning, you can connect this work directly to your 3–5–10-year exit timeline and value growth roadmap.

From Number to Narrative: Using EV in Client Conversations

An enterprise value assessment isn’t just a valuation report—it’s a storytelling tool.

You can use EV to:

• Explain capital structure trade-offs
• “If we pay down $2M of debt, EV won’t change—but the equity value you keep at exit will.”
• Frame value gap and timing
• Combine EV with your client’s personal “freedom number” from your exit planning work to quantify how far they are from a successful exit.
• Highlight risk and “deal-killer” zones
• Show how high leverage, customer concentration, or weak profitability might drive lower EV/EBITDA multiples in a sale process.
• Connect today’s actions to tomorrow’s price
• Tie specific initiatives (margin improvement, recurring revenue, governance, leadership depth) to their expected impact on future EV.

Because EV is also the basis for widely used ratios, it overlaps naturally with education you may already be doing around EBITDA, cash flow, and enterprise value growth.

How Software Can Automate Enterprise Value Assessment

Doing all of this in spreadsheets works—until you have 10, 20, or 50 clients all updating financials at different times.

That’s where enterprise value assessment software becomes a force multiplier:

• Automated data pulls from accounting platforms
• Built-in EV formulas and templates
• Scenario modeling (e.g., “What happens to EV if we reduce debt by 25%?”)
• Dashboard views for both advisors and owners
• Audit trails that show how EV has changed over time

In Maus, for example, you can combine valuation, risk diagnostics, and strategic planning in one system, so enterprise value becomes a living metric inside your ongoing business planning and exit-readiness process, not just a one-off number in a PDF.

That makes it much easier to move clients through the five stages of value maturity and into a position where buyers see both strong performance and reduced risk.

Common Pitfalls in Enterprise Value Assessments

When you review client valuations, watch for these red flags:

• Confusing equity value with enterprise value
• Owners often think “valuation” is just what they walk away with. EV lets you clearly explain the difference.
• Ignoring off-balance-sheet obligations
• Lease liabilities, guarantees, or hidden debt can distort EV if not properly captured.
• Using stale or inconsistent financials
• Enterprise value built on outdated numbers will mislead both you and the client—especially in volatile markets.
• Comparing EV multiples across unrelated industries
• Capital-intensive manufacturing firms and asset-light software companies live in different multiple universes.
• Treating EV as “the answer” instead of a tool
• EV is a powerful metric—but it’s most valuable when paired with exit readiness, leadership, risk, and strategy work.

Enterprise Value Assessment 

FAQs

What is an enterprise value assessment?

An enterprise value assessment is a structured process to calculate and interpret a company’s enterprise value, its total value including equity, amount of debt, and cash and to use that number in exit planning, benchmarking, and value-growth decisions.

How is enterprise value different from market capitalization?

Market capitalization reflects only the value of a company’s equity (shares × share price).

Enterprise value adds debt and subtracts cash, giving a more complete picture of what it would cost to acquire the entire business.

Why do advisors use EV/EBITDA and other EV multiples?

Ratios like EV/EBITDA compare enterprise value to a performance metric that approximates operating cash flow. They’re widely used by buyers to compare targets within the same industry and to anchor pricing discussions.

How often should enterprise value be reassessed?

For active exit planning or growth engagements, many firms reassess EV at least annually, and often quarterly, updating valuations as new financials come in and key initiatives move forward.