01The short answer
Enterprise value is the value of the operating business regardless of how it is financed. Equity value is what belongs to the shareholders after borrowings and debt-like items are deducted and surplus cash is added. Offers are usually quoted on a cash-free, debt-free basis, so the bridge between the two is where many negotiations are won or lost.
02Debt-like items in UAE companies
Beyond bank borrowings, buyers commonly treat the following as debt:
- Accrued end-of-service gratuity for employees
- Amounts owed to shareholders or related parties
- Declared but unpaid dividends
- Overdue supplier balances and tax liabilities
- Customer advances for work not yet performed
03Working capital
A buyer expects the business to come with a normal level of working capital. If receivables have built up because government or corporate customers pay slowly, or stock is unusually high, the price may be adjusted. Agreeing what is normal, before completion accounts are drawn up, avoids disputes later.
This article explains general principles for UAE readers. Your own valuation will depend on your company, its documents and why the figure is needed, so speak to us before relying on it.