In acquisitions, net debt is deducted to move from enterprise value to equity value. Whether debt-like items such as lease liabilities, unpaid dividends, tax liabilities and severance pay are included in net debt is therefore a matter for negotiation.
Related terms
EBITDAEarnings before interest, tax, depreciation and amortisation; used as an indicator of the cash-like profitability generated by a company's core operations.Financial due diligenceA detailed review of the target company's financial position, profitability, indebtedness and risks before an acquisition or investment.Lease liabilityA liability measured as the present value of the lease payments to be made over the lease term.LeverageThe extent to which a company uses debt to finance its assets or investments.Completion accountsFinancial statements prepared as at the closing date of an acquisition, through which the final price is set by net debt and working capital adjustments.Cost of capitalThe minimum rate of return investors expect from an investment in return for the risk they take.
Last updated: October 22, 2026 · This definition is for general information only.