Adjusted EBITDA
The numerator of the multiple, and the only line of the price that is neither an accounting measure nor audited
The thesis
Every real of adjustment is multiplied by the multiple. One million of accepted add-backs is worth six and a half million in price, and it is the line that most moves the value of a transaction
What the study establishes
1
Documenting the six main add-backs is worth 10.6 million in price, at a cost of tens of thousands
2
The rate at which each type of adjustment survives due diligence ranges from ninety per cent to almost zero
3
The adjustment the seller cannot document is the first one the buyer removes
Contents
- The leverage of the adjustment
- Types of add-back
- What survives due diligence
- Normalisation
- The constructed case
- How to prepare
- The gaps
- The mandate