Recruiter's Glossary

Examples: J-Curve • Earnout • Entry Multiple

Enterprise Value

Term from Private Equity industry explained for recruiters

Enterprise Value is a way to measure how much a company is worth in total. Think of it like calculating the full price tag of buying a business, including both what you'd pay the shareholders and any debt you'd need to take over. It's different from just looking at the stock price because it gives a more complete picture of the company's total value. Investment professionals use Enterprise Value when comparing companies or deciding on fair prices for buying and selling businesses. You might also see it called "EV" or "firm value" in job descriptions and resumes.

Examples in Resumes

Analyzed potential acquisition targets and calculated Enterprise Value for companies in the technology sector

Created financial models to determine Enterprise Value and other key metrics for merger opportunities

Led due diligence process and Enterprise Value calculations for deals ranging from $50M to $2B

Prepared investment memorandums including EV analysis for private equity transactions

Typical job title: "Private Equity Associates"

Also try searching for:

Investment Banking Analyst Private Equity Analyst M&A Analyst Investment Associate Financial Analyst Corporate Development Associate Valuations Analyst

Where to Find Private Equity Associates

Professional Organizations

• Association for Corporate Growth (ACG)
• CFA Institute
• Private Equity Growth Capital Council

Online Communities

Job Boards

Example Interview Questions

Senior Level Questions

Q: How would you explain the relationship between Enterprise Value and equity value to a client?

Expected Answer: Should explain in simple terms that Enterprise Value is the total value of a company including debt, while equity value is just the value of the shareholders' stake. Should provide clear examples of when each measure is more appropriate to use.

Q: What are the key factors that could affect Enterprise Value during a merger or acquisition?

Expected Answer: Should discuss various factors like market conditions, company performance, debt levels, working capital, and synergy potential in straightforward, non-technical terms.

Mid Level Questions

Q: How do you calculate Enterprise Value and what are the main components?

Expected Answer: Should explain that Enterprise Value is calculated by adding market value of equity and debt, then subtracting cash. Should be able to explain why each component matters in simple terms.

Q: Why might a company's Enterprise Value change even if its operations haven't changed?

Expected Answer: Should discuss external factors like market conditions, interest rates, industry trends, and changes in comparable company valuations.

Junior Level Questions

Q: What's the difference between Enterprise Value and Market Capitalization?

Expected Answer: Should explain that Market Cap only looks at stock value, while Enterprise Value includes debt and cash to give a fuller picture of company worth.

Q: Why do we use Enterprise Value multiples in company comparisons?

Expected Answer: Should explain that Enterprise Value multiples help compare companies fairly regardless of their debt levels, making it useful for comparing different sized businesses.