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  • Writer's pictureThomas Tsang

Enterprise value

Enterprise value is the market capitalisation of ordinary shares plus preferred shares and debts minus cash and cash equivalent. It is the cost to the acquirer when it buy over a company‘s ordinary shares. It is because the acquirer will assume the debts and cash will belongs to the acquirer.

Enterprise value tell acquirer the actual cost when buying the ordinary shares. That is the debts need to pay and the cash you have in the company.

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