A revenue peg and a working capital peg are two different mechanisms used to determine purchase price adjustments in M&A transactions. While working capital pegs are the standard approach in most middle-market deals, revenue pegs may be used in certain asset-light or recurring-revenue businesses. This guide explains how each method works, when buyers use them, and how they affect the bridge from enterprise value to final seller proceeds.
Normalized EBITDA and adjusted EBITDA are often used interchangeably in M&A discussions, but they serve different roles in the valuation process. Normalized EBITDA removes non-recurring or owner-specific items to reflect sustainable operating earnings, while adjusted EBITDA often incorporates buyer underwriting assumptions such as cost savings or pro forma changes. Understanding how these adjustments work—and how they influence valuation multiples, enterprise value, and the EV-to-equity bridge—is critical for founders, acquirers, and advisors evaluating middle-market transactions.