Earnings before interest, tax, depreciation and amortisation: a measure of operating profitability used to compare businesses and to price deals. Not a measure of cash, however often it is treated as one.
EBITDA is the number deals are multiplied on, which is exactly why it attracts adjustment. The definition looks fixed. The version in the deck rarely is.
Last reviewed 3 July 2026 · Free and ungated
Have the add-backs tested by operators who have bought and sold against adjusted numbers, before the price is anchored.
Get independent perspectivesEBITDA takes operating profit and adds back depreciation and amortisation, producing earnings before interest, tax, depreciation and amortisation. The intent is comparability: it strips out the effects of financing choices, tax positions and historical asset purchases, leaving something closer to the underlying operating engine. Valuation multiples, lending covenants and earn-out targets are routinely set against it.
When a business is priced at a multiple of EBITDA, every extra euro of EBITDA is worth eight or ten at completion. That arithmetic explains most of what happens to the metric during a sale process. It also explains what a buyer must keep in view: EBITDA ignores capital expenditure, working capital movements, and the interest and tax that will still have to be paid, so a capital-hungry business can post healthy EBITDA while consuming cash. The multiple prices the engine; it says nothing about the fuel bill.