Enterprise Value

Enterprise Value is a measure of how much you can purchase a company free of its debt and liability. Enterprise Value in Investopedia is defined as the theoretical take over value of the business. 

Enterprise Value = Market Cap + (Debt + Minority Interest + Preferred Shares) - Total Cash and Cash Equivalent

Market Capitalisation is the market value of company common shares. It is the current share price x total number of equity shares of company

Debt includes bonds and bank loans, excluding trade creditors. When you take over the business, you will be acquiring its debt as well. Hence, you will need to use the cash to pay down its debt.

Minority Interest is a non-current liability which represents the proportion of the subsidiary owned by minority shareholders.

Cash and Cash Equivalent represents cold hard cash and short term investment which is highly liquid and can be converted into cash. They are subtracted from Enterprise Value because Cash and Cash Equivalent will be used to reduce any outstanding debt level of the business.  

How to understand Enterprise Value?
The private equity will completely buy out the targeted company or business, achieved full control of the business. The hostile takeover company will pass all the debt (through funding to acquire company) to the victim company, squeeze out all the cash and asset and use them to pay special dividend (debt financed dividend) for exit strategy.