Why this bridge matters
Many valuation outputs are quoted as enterprise value, especially when they come from DCF models or EV-based trading multiples. But boards, founders, and investors usually make decisions on what remains for common shareholders, which means you need a clean bridge from EV to equity value using the right balance-sheet claims.
Core bridge
Equity value = EV + cash - debt - preferred stock - minority interest + other adjustments.
Common pitfalls
- Using EV/Revenue multiples but comparing to equity value market cap (mismatch).
- Using stale balance sheet numbers with a current EV estimate (date mismatch).
- Ignoring other claims (leases, pensions, non-operating assets/liabilities) when material.
Practical checklist
- Make sure EV and balance sheet inputs are from the same date/time frame.
- Cross-check: equity value should be roughly market cap (if public) after adjustments.
- Use scenarios: EV can change a lot with discount rate and terminal assumptions.