Quality of earnings and normalized EBITDA are critical steps in how buyers evaluate a company’s true earnings power during an M&A transaction. This guide explains how reported EBITDA is adjusted, tested through diligence, and used to support valuation multiples in middle-market deals.
EBITDA multiples and revenue multiples are two of the most common valuation methods used in mergers and acquisitions. This guide explains when buyers use each metric, how revenue and EBITDA translate into enterprise value, and why profitability and margin assumptions can dramatically influence valuation outcomes.
Completion accounts and locked box are two primary pricing mechanisms used in mergers and acquisitions to determine the final purchase price. This guide explains how each structure works, how working capital and net debt adjustments are handled, and why completion accounts dominate U.S. middle-market transactions while locked box structures are more common in Europe.
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.
A practical guide to sources and uses in M&A, including how to read and build the table, how acquisition financing is structured, how debt, equity, rollover, seller notes, assumed debt, minimum cash, fees, and funds flow affect deal economics, and what sellers should understand before relying on buyer financing.
Debt-like items are liabilities that reduce seller proceeds in M&A transactions. Learn how enterprise value adjustments, net debt, and working capital determine the equity value paid at closing.
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.
A practical guide to purchase price adjustments in M&A, including working capital true-ups, net debt, estimated closing statements, caps, collars, escrows, accounting policies, disputes, negotiation, and examples.
An overview of the primary business valuation methods, including the income approach (capitalization of earnings and DCF), the market approach (multiples and precedent transactions), and the asset-based approach—plus when each method is most appropriate.
A step-by-step guide to valuing a business from a buyer’s perspective, including valuation methods, real examples, and how enterprise value converts into seller proceeds.