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Mergers, Acquisitions & Investment Banking for Mid-Market Business Owners
Recast EBITDA Defined
EBIT = Operating Revenue – Operating Expenses + Other Revenue 

EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization.  EBITDA is equal to the Net Income (Loss), displayed on the Profit & Loss Statement. Generally, EBITDA is presented on an annual basis, using the Fiscal Year End Profit & Loss Statement.
 

Recast EBITDA = EBITDA +/- the following items:

  1. Add to EBITDA executive & family members salaries, bonuses, benefits, luxury cars & extraordinary owner benefits, subtracting an amount equal to fair market salary & benifit package for replacement executive(s).
  2. Add to EBITDA rents paid by the business to the owner for building(s) & space; subtracting a fair market replacement amount for business rental expenses.
  3. Add to EBITDA consulting fees paid to owners, family members & friends of the owners.
  4. Add to EBITDA leases paid to owner for equipment, property & other items financed by the owner, subtracting a fair market replacement amount.
  5. Add to EBITDA loan payments & interest paid to owner(s).
  6. Add to EBITDA expenses incurred by the business that benefit the owner but do not substantially benefit the business.
  7. Add to EBITDA any capital expenditures within the past year, R&D and software development cost incurred by the business.
  8. Add to EBITDA any discretionary travel, lodging & entertainment that does not directly benefit the business.
  9. Add to EBITDA life & health insurance premiums paid by the business that benefit the owners and family above the business.
  10. Add to EBITDA any funding provided by the business in support of outside, external ventures or property for which financial benefits flow to the owner.
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