The headline price is not the shareholder distribution.
Enterprise value describes the operating business before its financing structure. Equity value adjusts for cash and senior claims. Transaction costs further reduce the pool available for allocation among shareholders.
Real purchase agreements define debt-like items, cash, working-capital targets and leakage in detail. This bridge provides a transparent arithmetic structure; it does not determine the contractual adjustment rules.
The formula, made clear.
- Cash delivered
- Only cash included in the transaction’s agreed bridge.
- Debt-like claims
- Entered obligations ahead of equity, avoiding double counting in enterprise value.
- Equity pool
- Unfloored residual; a negative result is a shortfall before shareholder distributions.
Put the numbers in context.
$30,000,000.00 enterprise value plus $2,000,000.00 cash less $5,000,000.00 debt and $1,000,000.00 costs leaves $26,000,000.00 for equity.
| Input | Example value |
|---|---|
| Enterprise value | $30,000,000.00 |
| Cash delivered at completion | $2,000,000.00 |
| Debt and debt-like claims | $5,000,000.00 |
| Seller-side transaction costs | $1,000,000.00 |
| Equity proceeds before shareholder allocation | $26,000,000.00 |
What this calculation assumes
A simple cash/debt/cost bridge. No working-capital true-up, tax, escrow, preference allocation, pension deficit or noncontrolling interest unless included in entered claims. Negative equity is not a shareholder liability.
What to consider next.
Use a nonnegative distributable equity pool in the preference comparison before estimating founder or investor proceeds.
How we approach financial models →