Buying a business will make you learn about a lot of financial terms and enterprise value is a very important one in this case. This number is the total value of the business including any debts it may have. This value will then be offset by any cash equivalents they may have.
For example…
If Tom were to buy Jerry’s cheese business; Firstly, that would make for a great cartoon and secondly, he would buy the business based on its enterprise value. This amount would be the value of the business plus any debts Jerry may have. In a bit of rare, good news for Tom, Jerry had $20 worth of cash equivalents, offsetting the total value, the cash and cash equivalents
