# Net debt

Interest-bearing debt minus cash, the bridge from value to price.

In a [cash-free, debt-free](https://searchspheresource.com/glossary/cash-free-debt-free) deal the seller keeps the cash and clears the debt at closing, so net debt is what turns an agreed [enterprise value](https://searchspheresource.com/glossary/enterprise-value) into what actually changes hands. A buyer who overlooks it can settle on a headline price and then be surprised by a materially different equity check once the [balance sheet](https://searchspheresource.com/glossary/balance-sheet) is trued up.

In numbers: A business with a $5M enterprise value carrying $1.2M of debt and $300k of cash has $900k of net debt, so the equity price works out to about $4.1M.

Source: https://searchspheresource.com/glossary/net-debt
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