Total Enterprise Value, or TEV, is valuation metric that quantifies the total value of a company. TEV is often used when evaluating the overall economic worth of a business in the context of a sale or acquisition.
Whereas many public companies are measured on a market capitalization basis (total shares outstanding multiplied by the current stock price) that indicates just the equity value of an entity, TEV incorporates the value of both equity and debt, making it a more comprehensive measurement and comparative tool to evaluate companies with varying capital structures.
TEV is calculated by taking the equity value of a company and adding debt and preferred stock while subtracting cash.
Lastly, TEV is commonly paired with revenue and EBITDA data points to form the market multiplies ‘TEV/Revenue’ and ‘TEV/EBITDA.’ These multiples assist with relative valuation comparisons between companies.
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