What is the difference between enterprise value and equity value?

Equity value is the value of the company to its shareholders. For a public company that's the market cap, share price times shares outstanding. I'd use diluted shares, so options and convertibles are counted. Enterprise value is the value of the core business to all investors, both debt and equity. To get from equity value to enterprise value, you add debt and subtract cash. You also add preferred stock and noncontrolling interest, because those are claims from other investor groups. Cash comes off because it's a non-operating asset, and a buyer could use it to pay down the debt. The difference matters when choosing multiples. Enterprise value pairs with metrics before interest, like revenue, EBITDA and EBIT, because those belong to all investors. Equity value pairs with net income and earnings per share, which come after interest.

Equity value is the value of the company to its shareholders. For a public company that's the market cap, share price times shares outstanding. I'd use diluted shares, so options and convertibles are counted. Enterprise value is the value of the core business to all investors, both debt and equity. To get from equity value to enterprise value, you add debt and subtract cash. You also add preferred stock and noncontrolling interest, because those are claims from other investor groups. Cash comes off because it's a non-operating asset, and a buyer could use it to pay down the debt. Noncontrolling interest goes in because the parent consolidates 100% of the subsidiary's revenue and EBITDA, so the value has to include the part it doesn't own. The difference matters when choosing multiples. Enterprise value pairs with metrics before interest, like revenue, EBITDA and EBIT, because those belong to all investors. Equity value pairs with net income and earnings per share, which come after interest. A way to picture it is a house. The house price is the enterprise value, the mortgage is the debt, and your equity is what's left. It also means that, in theory, enterprise value doesn't change with capital structure. If a company raises debt and holds the cash, equity value is unchanged and the extra debt and cash cancel out.