Glossary / EBITDA

EBITDA

EBITDA is earnings before interest, taxes, depreciation and amortisation — a profit measure used for larger businesses where no single owner’s salary dominates.

EBITDA strips out financing and accounting effects to compare the operating profit of businesses on a like-for-like basis. It is the standard for larger acquisitions; smaller owner-operated businesses use SDE instead, because for them the owner’s own pay is the biggest single line.

The rough rule: below about $1–2M in earnings, expect SDE; above it, expect EBITDA. A listing quoting EBITDA on a $200k business is usually dressing the numbers up.

Related terms

SDE (Seller’s Discretionary Earnings)
Multiple

See these figures on real listings — every deal on Acquisiteur shows its multiple against comparable sales.

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