Definition

EBITDA

Earnings Before Interest, Tax, Depreciation, and Amortisation — the operating-cash-flow proxy most M&A multiples are quoted against.

EBITDA strips out financing structure (interest), tax regime, and historical capex (depreciation/amortisation) to approximate operating cash generation. It is the denominator under most enterprise-value multiples in private-market M&A. The version that matters in a deal is adjusted EBITDA — normalised for one-offs, owner perks, stock-based compensation policy, and any pro-forma run-rate adjustments. The quality of those adjustments is itself a diligence workstream.