The FNDRS Playbook · PB10 · Pre-emption
The adjusted EBITDA bridge
Adjusted EBITDA starts from net income on the financials: add back interest, taxes, depreciation, and amortization to reach EBITDA, then adjust for owner and one-time items, up and down, each with proof. Buyers price a multiple of it, so every defensible dollar is worth that multiple in price.
Can you simply state your adjusted EBITDA?
Adjusted EBITDA is built, not declared.
Buyers price a multiple of Adjusted EBITDA. Every dollar of defensible adjustment is worth that multiple in price. Every dollar that does not hold up is worth the same multiple in lost credibility.
The bridge shows how we get from the tax return to the number a buyer will accept.
The three P’s
Where this chapter sits
Pull one lever and you improve the outcome. Pull all three and you change it.
Positioning
Which category. Where in the range.
Pre-emption
Find it first. Frame it first.
Process
Competition. Timing. Leverage.
The figure
Can adjustments lower adjusted EBITDA?
Yes: adjustments go both ways, such as rent below market on a related-party lease or the replacement cost of an unpaid family member.
| Step | Line | Amount |
|---|---|---|
| Start | Net income, per the financials | $1,400,000 |
| Add | Interest | $120,000 |
| Add | Taxes | $380,000 |
| Add | Depreciation and amortization | $300,000 |
| Equals | EBITDA | $2,200,000 |
| Add | Owner compensation above market | $250,000 |
| Add | Non-recurring legal settlement | $90,000 |
| Add | Personal expenses run through the business | $60,000 |
| Subtract | Rent below market, on a related-party lease | −$80,000 |
| Subtract | Replacement cost of the owner’s unpaid family member | −$70,000 |
| Equals | Adjusted EBITDA | $2,450,000 |
How to read it
A step chart starting from reported net income, adding back interest, taxes, depreciation, and amortization to reach EBITDA, then applying owner-related and non-recurring adjustments, both positive and negative, to reach Adjusted EBITDA.
Premium exits are not negotiated. They are prepared.
See where your business sits
The Go-To-Market Analysis (GTMA) places your business on these frameworks with your own numbers, before a buyer does.