EBITDA

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a financial metric that reflects operating profit before interest, taxes and depreciation. It neutralises financing and accounting policy effects and is well suited for comparing companies with different capital structures.

In M&A, EBITDA is often the basis for company valuation via multiples (e.g. EV/EBITDA). Normalised or adjusted EBITDA is often subject to negotiation: Add-backs increase EBITDA from the seller's perspective – buyers scrutinise these adjustments.

Our Blog on EBITDA adjustments explains typical discussion points. Relevant for company sale and transactions.