EBITDA
Earnings before interest, taxes, depreciation, and amortization. The number most buyers multiply.
In a sale
What it changes in a sale
EBITDA is the starting point for most conversations about price. Buyers rarely stop at the reported figure: they adjust it for owner-related and one-time items to reach adjusted EBITDA, the number they multiply. Knowing the difference between the two is the first step to knowing what a buyer will pay.
Where it comes up
Read it in context
In the articles
- The 4.5x problemMost founders assume their business is worth the trade multiple. That assumption costs millions.
- Same business, two outcomesTwo identical businesses, one prepared and one not, sell for very different prices.
- An add-back is an argumentAdjusted EBITDA is built, not declared, and the buyer's accountants will rebuild it.
- When a buyer calls firstAn inbound offer is information, not a decision.
- Real estate and the operating businessOwner-held real estate is a second transaction inside the first.
- Bigger before you sell: combinations and add-onsSometimes the best pre-sale move is an acquisition of your own.
- Multiple entities, one storyFounders build in pieces. Buyers buy a whole.
In The FNDRS Playbook
- PB02 The multiple rangeYour industry has a range. Where you land is decided by evidence.
- PB03 The category ladderBuyers price the category before they price the company.
- PB06 The exit readiness matrixValue and readiness are different things. Both decide the outcome.
- PB09 The size premium staircaseBigger businesses get higher multiples. Not because of size, but because of what size proves.
- PB10 The adjusted EBITDA bridgeAdjusted EBITDA is built, not declared.
- PB11 The add-back defensibility matrixAn add-back is an argument. Some arguments win.
- PB18 The earn-out design gridAn earn-out you cannot control is a price cut with extra steps.
- PB19 The three numbersWhat you need. What the market pays. What you keep.
See the terms with your own numbers
The Go-To-Market Analysis (GTMA) builds the file a buyer would build on your business, before a buyer does.