Finance & Valuation
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization
A measure of operating profitability that strips out financing decisions and accounting conventions. EBITDA multiples are the most common valuation metric in software M&A -- a company trading at 15x EBITDA in a market where comparables trade at 20x might be undervalued, or might have problems the market is pricing in. Adjusted EBITDA (adding back one-time costs) is common but requires scrutiny: one buyer's "adjustment" is another buyer's red flag.