ACQUISITION SERVICES SUPPLIER OF THE YEAR
Why is it such an important metric in Acquisitions and Mergers? EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation. Ultimately, EBITDA is a measure of a business’s profitability, along with terms like gross profit and net income.
All of these items are reported on the income statements.
EBITDA is an important metric within Mergers and Acquisitions because it’s a way in which you can base the value of a business on its multiple.
Different sectors and industries use different multiples. EBITDA now versus what it could be once a purchase has been made through synergies is a key tool to unlocking the true value to a buyer. I always tell my clients, turnover is key, but what we are really bothered about is profit and post synergy profit, ie Post Synergy EBITDA