What is it? In relation to revenue?
What is an ebitda multiple and what does it mean?
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EBITDA stands for Earnings before Interest Taxes, Depreciation and Amortization.
It’s used as a rough measure of how much cash a business generates and without preferencing businesses that have financing that is off the income statement. Debt financing vs equity financing have very different income statement and tax treatments but a buyer can generally expect to have some flexibility to choose between the two. So, EBITDA tends to be the income figure that acquirers focus on (because that’s a good measure of how much cash they could have available for other purposes and they can choose the capital structure of the acquisition.
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