There’s a story on TechCrunch today on how Microsoft’s market value exceeded Google’s market value. I don’t know if this is news, but I suppose it’s interesting to check in from time to time on how the public markets perceive the two tech giants.
What caught my eye were two comments from those claiming to be from two prestigious venture capital firms: Accel Partners and Silver Lake Partners.
Here’s an angry one from Han Lee, Accel Partners:
Dear writer, do you really not know the difference between market cap and enterprise value? Pathetic.
From Jeff Schnabel, Operating Executive at Silver Lake Partners:
Total enterprise value is a more accurate measure of a company’s value (market cap is only a piece of the puzzle – the value of the company’s publicly traded equity).
If you look at TEV, Google is still worth more than Microsoft ($306.4B vs. $290.4B)
What is Enterprise Value and how’s it different to Market Value you may ask? Finance people love to confuse lay people to make themselves look smarter, so let’s peel away the jargon.