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EV ↔ Equity Value Bridge

Walk between enterprise value and equity value through net debt, preferred equity, minority interest, and non-operating assets. Bidirectional conversion with full bridge display.

Direction

Bridging items

Enterprise value

$8,500,000,000

Equity value

$7,500,000,000

Net debt

$1,050,000,000

Debt − cash

Bridge walk

Equity value (market cap)$7,500,000,000
+Total debt$1,500,000,000
−Cash & equivalents$450,000,000
+Preferred equity$0
+Minority interest$50,000,000
−Non-operating assets$100,000,000
Enterprise value$8,500,000,000
100% private

Your numbers never leave your browser. Tentt has no backend, no database, and no record of anything you type into this calculator — the math runs entirely on your device. Output is for illustrative modelling only and does not constitute investment, tax, legal, or accounting advice; verify any number you intend to act on.

What is the EV ↔ Equity bridge?

The Enterprise Value to Equity Value bridge is the single most-used connector in finance. It sits at the top of every DCF model, every LBO model, every public comparables analysis, every M&A pitch deck, and every valuation memo. It is the formula that translates between the price equity holders see (market cap) and the price the entire business commands (enterprise value), and you cannot do almost any valuation work in finance without using it multiple times a day.

Despite how foundational it is, only one free interactive web tool for the bridge exists today — RyanOConnellFinance.com's solo-built calculator. The educational sites publish articles about the formula but none have built an interactive version. This page is the comprehensive free version with bidirectional conversion (equity → EV or EV → equity), every bridging line item the textbook formula contains, and a clean walk display ready to drop into a memo or pitch slide.

The bridge formula

The base formula goes equity-to-EV. Working in the other direction simply flips every sign.

Equity → Enterprise Value

EV = Equity Value + Total Debt − Cash + Preferred Equity + Minority Interest − Non-Op Assets

Enterprise → Equity Value

Equity = EV − Total Debt + Cash − Preferred Equity − Minority Interest + Non-Op Assets

Each line in the bridge captures a claim on the business that sits between equity holders and the total operating value. Total debt is added because debt holders have first claim on the company's cash flows. Cash is subtracted because it can be distributed to whoever buys the equity, effectively rebating part of the purchase price. Preferred equity and minority interest are added because they are third-party claims on the operating cash flow stream. Non-operating assets — passive investments, JV stakes, excess real estate, tax assets — are subtracted because they don't generate the operating EBITDA that the EV multiple is pricing.

Worked example

Worked example

A public software company has 100M shares outstanding trading at $75 per share — a market cap (equity value) of $7.5B. Its 10-Q balance sheet shows $1.5B of total debt, $450M of cash and equivalents, no preferred equity, $50M of minority interest from a 60%-owned subsidiary, and a passive $100M investment in a portfolio company that produces no operating cash flow.

Bridge: $7,500M (equity) + $1,500M (debt) − $450M (cash) + $0M (preferred) + $50M (MI) − $100M (NOA) = $8,500M enterprise value.

If the company reports trailing-twelve-month EBITDA of $425M, the EV/EBITDA multiple is $8.5B / $425M = 20.0x — the multiple that gets quoted in every comparable companies exhibit. Using the equity value instead would give 17.6x, which would understate the true valuation multiple and mismatch the EBITDA number in the denominator.

When you'll use this

Every time you compute a valuation multiple. Every time you compare two companies on EV/EBITDA, EV/Sales, or EV/EBIT. Every time you take a sponsor's "8x EBITDA" offer and convert it into a per-share price for the target's shareholders. Every time you read a research note that quotes both market cap and enterprise value and you want to verify the reconciliation. Every time you build a DCF that produces an enterprise value and you need to convert it to a per-share intrinsic value.

The bridge is the connective tissue between three other tools on this site. It feeds into the DCF calculator for converting unlevered enterprise value into per- share equity value, into the LBO calculator for sizing the equity check from a target enterprise value, and into the accretion / dilution calculator for translating a strategic-buyer offer back into a per-share consideration. For an LBO sources and uses table that drops the equity check into a balanced capital structure, see the sources and uses builder.

Frequently asked questions

What is the difference between enterprise value and equity value?
Equity value (or market capitalisation) is what shareholders own — the price per share times the number of shares outstanding. Enterprise value is what the entire business is worth to all capital providers, including debt holders, preferred shareholders, and minority interest holders. The two differ because debt holders have a claim on the business's cash flows ahead of equity holders, and cash on the balance sheet effectively reduces the cost of acquiring the business. Enterprise value is the right number for valuation multiples (EV/EBITDA, EV/Revenue) because it pairs the entire value of the business with the entire stream of cash flows the business produces.
How do you bridge from equity value to enterprise value?
EV = Equity Value + Total Debt − Cash & Equivalents + Preferred Equity + Minority Interest − Non-Operating Assets. The intuition is that to acquire 100% of the business you would need to buy out the equity holders at market price (equity value), assume or refinance all of the company's debt (+ debt), pocket the cash on the balance sheet (− cash), buy out preferred holders (+ preferred), buy out minority shareholders in subsidiaries (+ MI), and net out any value tied to non-core assets that don't generate the operating cash flow you're paying for (− NOA).
Why subtract cash from enterprise value?
Because cash on the target's balance sheet effectively reduces the acquisition cost. If a company has $500M of equity value and $200M of cash, the buyer paying $500M for the equity gets the cash back on day one — meaning the net cost of the operating business is $300M. Cash is treated as a 'negative debt' item in the bridge for exactly this reason. The convention assumes the cash is fully distributable; restricted cash, working capital cash, and trapped foreign cash should be excluded from the cash line in the bridge.
What counts as non-operating assets?
Non-operating assets are anything on the balance sheet that doesn't generate the operating cash flow you're paying for in the EV/EBITDA multiple. The most common items are passive investments in other companies, joint venture stakes accounted for under the equity method, excess real estate not used in operations, marketable securities held for investment rather than working capital, pension surpluses, and tax-loss carryforwards. They're subtracted from EV because the buyer can monetise them separately without affecting the operating business — the operating EBITDA multiple should not be paying for them.
What is minority interest in the EV bridge?
Minority interest — also called non-controlling interest (NCI) — appears when a company consolidates a subsidiary it doesn't fully own. The full subsidiary EBITDA shows up in the parent's income statement, but the minority shareholders own a portion of that EBITDA stream. Adding minority interest back to EV in the bridge ensures that the EV/EBITDA multiple matches: the numerator captures the value of the entire subsidiary (because EBITDA in the denominator is 100% of the subsidiary's earnings), and the cost of buying out the minority shareholders is included in the EV figure.
How is this used in M&A deal modelling?
Every M&A deal starts with an offer for the target's equity value (per-share price × shares), and every M&A model converts that equity offer into an enterprise value to compute the deal multiple. Conversely, when sponsors quote a deal at '8x EBITDA', they mean 8x EV/EBITDA, and the offer price they make to shareholders is computed by working backward through the bridge — EV = 8 × EBITDA, then Equity = EV − Net Debt − Preferred − Minority + NOA. The bridge is the connective tissue between every deal multiple in finance and every offer price you'll ever negotiate.

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