Glossary
Valuation of a business by the EBITDA
Definition : EBITDAÂ
Gross operating surplus, better known as EBITDA, represents the cash flow generated by the business activity, after deduction of its operating expenses.
How to use the EBITDA?
The EBITDA criterion is used quite regularly, especially in 3 situations.Â
The first situation concerns bank financing requests. Indeed, the banker will study the EBITDA in order to know the repayment capacity of the business or the company.Â
In the case of business acquisitions , the EBITDA is an indicator of the ability to repay a loan and therefore of the potential financing for the buyer.Â
Last point, when drawing up annual balance sheets: the EBITDA highlights the points that allow the overall profitability of the business to be evaluated.
The strength of a XVAL valuation is the delivery of a detailed and documented report within 3 days, justifying the methods and assumptions used (EBITDA restatement, coefficient...) which will be the basis for discussions with the buyer, the banker.
If you wish to have your company evaluated with the EBE, do not hesitate to contact one of our experts: contact a XVAL consultant.
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