Enterprise value

The value of the whole business to every capital provider: equity value plus interest-bearing debt, minus cash, so it prices the operations apart from how they were financed.

A multiple quoted on EBITDA usually lands on enterprise value, not on the equity check; you subtract the debt you assume and add the cash you keep to move between the two, and treating them as one number misprices the deal.

In numbers: A shop with $500,000 of EBITDA at a 3.5x multiple is a $1,750,000 enterprise value; assume $250,000 of equipment debt and keep $50,000 of cash and the equity you buy is about $1,550,000.