Enterprise value (EV) and equity or market value (MV) are two different terms used in the determination of the value of a business. Enterprise value is the value placed on the net operating assets of a business by all stakeholders, whereas equity value is the value placed on all assets of the business less its net debt by equity holders.
This free equity investment Excel template can be used to estimate the amount of equity which an investor might require in order make an investment in a startup business. The calculator takes into account the return required by the investor and the number of years to exit.
The capital structure of a business is the mixture of equity and debt it uses to finance its operations. The optimum capital structure is one which minimizes the weighted average cost of capital and thereby maximizes the valuation of the business.
Programs such as Dragons’ Den and Shark Tank have highlighted the need for an entrepreneur to know their numbers and provide a reasonable startup valuation when seeking investment for a startup business and preparing for a shark tank or dragons’ den type pitch.
When a business is seeking investment it needs to decide what percentage of the business it will offer in return for the investment (think dragons den or shark tank).
This simple business valuation calculator allows you to enter the investment and the percentage, and carry out a business valuation analysis to establish the return an investor will make.