Higher debt leads to a higher enterprise value because it represents an added cost that must be paid by any would-be acquirer. For instance, in our previous example, suppose that the company has $10 million in debt. With that in mind, you now know that in addition to the $100 million you need to purchase the shares from its existing shareholders, you also need an additional $10 million to pay off the company’s debts. Putting these figures together, your total enterprise value would be $100 million in market capitalization, plus $10 million in debt, minus $20 million in cash, for a total of $90 million.