What is EBITDA?

EBITDA is an acronym that stands for Earnings Before Interest, Taxes, Depreciation and Amortization, and is the most common metric for measuring the cash flow of a business for valuation purposes. Importantly, the EBITDA that will be the basis of the valuation will be what the buyer expects to be the ongoing cash flow post-sale, and that ultimately requires a detailed analysis.  There are many factors that impact how a buyer views the EBITDA they are acquiring, including:

It’s important to understand that different buyers may have different views of what your EBITDA is, and that depending on their business approach, cost structure, geographic footprint, and resources, EBITDA could vary significantly from their point of view.