> enterprise value, which is the correct measure of the value of a business

Not even Warren Buffet thinks this. In economics, the correct measure of a value of a business is the future discounted expected value of cash flow and external utility. There's almost no way to measure this directly so major simplifying assumptions are made when applying this definition in practice.

I think his point is that DCF of a company's free cash flow is an attempt to estimate enterprise value, not equity value.

You can use either the cash flows to equity or the cash flows to the firm to calculate the value of equity (ex-non-operating-cash) or the enterprise value.

Enterprise value isn't the value of the business, its the cost to acquire a business and assume its debt. You've assumed that you have to take on a company's debt as an acquirer to take over a company.

The market cap is closest to its value representing what it takes to control/own/sell the company.

In financial theory, enterprise value corresponds to the sum of all discounted cash flows (after tax). Thus, it is the market's best estimate for the value of the business. The question of capital structure should not really matter according to the Miller-Modigliani theorem.

The value of a business is what someone would be willing to pay for control over it, or its market cap (value of all shares). This is typically disconnected from its DCF which is a modelled value based on expected future returns.

Enterprise value is also market cap + net debt, not its cumulative present value DCFs.

[1] http://www.investopedia.com/terms/e/enterprisevalue.asp

A change of control of Ford would likely trigger a default under Ford's debt, at which point it must be paid back. So if you are not financing with debt, an acquiror would really need the $150bn EV in order to afford to acquire the company. Of course, in reality, an acquiror would either replace such debt with new acquisition financing or work out a way to keep the existing debt in place.

DCF is indeed a method to estimate the fair value of a company's EV, not it's market cap. People will usually do a DCF, then subtract net debt in order to get an estimate of equity value from the DCF. Here's a citation: http://macabacus.com/valuation/dcf/overview

Strictly speaking market cap is what someone is willing to spend on a small portion of the company scaled up. The actual price someone is willing to pay for the whole thing is a different number, typically larger.

It isn't the EV either, though

Well, ownership and value are different things. Ford has large creditors and they lay claim to a correspondingly large portion of the cash flows. Tesla (presumably, looking at the difference between EV and market cap,) does not.

The significant extra value of Ford is ignored when you focus the cost of getting control of a company rather than total value.

How is EV calculated?