FAQ
Earnings
7 published.
·1 min
Is EBITDA the same as profit?
No. EBITDA sits above interest, tax, depreciation and every cash movement that is not in the P&L. A business can grow EBITDA every year while running out of money.
·1 min
Can I add my salary back to EBITDA?
Only the portion above a market rate for the work you actually do. Adding the whole salary back assumes the buyer gets a free chief executive, which no buyer accepts.
·1 min
What counts as a one-off cost?
Something that happened once, will not recur under new ownership, and has a document behind it. Three years of 'one-offs' are operating costs with an optimistic label.
·1 min
What is adjusted EBITDA?
EBITDA restated as it would look under a new owner — owner compensation at market rate, one-offs removed, personal costs stripped. It is the figure valuations actually use.
·1 min
Should I use SDE or EBITDA?
SDE if one owner works full time in the business and the buyer will replace them personally. EBITDA once a management layer exists. The multiples are not interchangeable.
·1 min
What is EBITDA?
Earnings before interest, tax, depreciation and amortisation — an attempt to measure what a business earns from operating, before the current owner's financing and accounting choices.
·1 min
What is SDE (seller's discretionary earnings)?
The total financial benefit one owner-operator takes from a business in a year — operating profit plus owner compensation, benefits and one-off costs added back.