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Can Enterprise Value be negative?
Answer
Yes — when a company's cash exceeds its market cap plus other debt-like items. This is rare but happens with distressed companies trading below their net cash, certain Japanese small-caps, and special-purpose vehicles. A negative EV signals the market believes operations are destroying value, so the cash alone is worth more than the whole entity.
Why interviewers ask this
Famous example: certain post-IPO biotech and tech companies have traded below net cash. From an LBO perspective, a buyer could in theory acquire the entity and pocket the net cash — but usually there's a reason for the market discount (litigation, cash burn, etc.).
enterprise valueedge cases