How does raising additional debt generally affect enterprise value?

Raising additional debt typically does not have a direct or automatic effect on enterprise value, primarily because the enterprise value is determined by the market's perception of the total value of the company, which includes both equity and debt components. When a company takes on more debt, while it increases the total liabilities, it also has the potential to generate additional cash flow through investments or operational activities financed by the debt.

In an ideal world, assuming the capital is used effectively, the increase in potential cash flows from leveraging the debt could offset the increase in liabilities, maintaining a stable enterprise value. Therefore, the theoretical perspective suggests that while debt can affect financial metrics like profitability and cash flow, it does not necessarily change the overall enterprise value.

In practice, various factors, such as the company's ability to manage and service new debt, market conditions, and investor perceptions, can influence how enterprise value is assessed following the incurrence of additional debt, but from a theoretical standpoint, it is considered that there is no definitive impact on enterprise value itself.