Sometimes people use the two terms interchangeably. However, for legal purposes there may be a significant difference in the two terms. Let’s assume your client is involved in a divorce action, and it is important to know the value of the business for settlement purposes. In this instance, you want the value of all assets less all liabilities. Enterprise value is often referred to as the value of the hard business assets (property, equipment, etc.) and the goodwill of the business. Equity Value is the Enterprise Value PLUS cash on hand, accounts receivable, inventories, and LESS all liabilities of the business. When dealing with legal matters, it is important to understand exactly what a definition of value includes, or excludes. A Certified or Accredited Valuation Analyst can always assist you in these matters.
Should you need business valuation assistance or have questions, please call one of our credentialed professionals at (615) 822-8342 or contact us via email.