The value of an enterprise is an indicator as to how the market attaches value to the organisation. The enterprise value (EV) is the aggregate value of the company, and provides a clear picture of the assets and liabilities held. The EV is a much more valid representation of a firm’s value than its market capitalisation.
Whether an organisation is large multinational or a small startup, enterprise valuation is important. There are a lot of factors considered when settling on the EV of a company, with many of them being financial aspects. However, with technology playing a big role in the structure and operation of many organisations, IT has to be considered in the valuation of a company.
Be sure to check out our next post in the series as we go into detail about the concept of enterprise valuation from an IT perspective.