Valuation Terms

EBITDA

Earnings before interest, taxes, depreciation, and amortization. In plain English, it is a common estimate of business profit before certain accounting and financing costs. Why it matters: Many buyers use EBITDA to compare businesses, estimate debt capacity, and set valuation, so small changes to EBITDA can have a large impact on price.

Related terms

Amortization

Paying down debt over time through scheduled payments. Why it matters: This gives owners a clearer way to understand buyer questions, advisor comments, and negotiation tradeoffs during a sale process.

Valuation

An estimate of what the business is worth. Why it matters: Valuation is a range, not a magic number, and it changes based on earnings quality, growth, risk, buyer type, deal structure, and market conditions.

More from Valuation Terms

Add-Backs Adjusted EBITDA CapEx Cash Flow Enterprise Value Equity Value Free Cash Flow Gross Margin Gross Profit Multiple Net Income Net Working Capital

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