Financial Analysis
Adjusted EBITDA
EBITDA restated to remove owner-specific compensation above market rate, one-time expenses, and non-recurring items, producing a normalized measure of operating earnings used in business acquisitions.
Earnings before interest, taxes, depreciation, and amortization, restated to reflect normalized operating performance. Common adjustments include above-market owner compensation, one-time legal or consulting fees, personal expenses run through the business, and non-recurring revenue or costs. The result is intended to represent the earnings a new owner could expect under standard operating conditions. Adjusted EBITDA is the most common earnings basis for valuation multiples on acquisition listings for businesses with revenues generally above $1 million. (See also: SDE, Add-back, EBITDA.)