Ebitda earnings before interest taxes depreciation and amortization is an indicator of a companys financial performance it measures a companys financial performance by computing earnings from core business operations without including the effects of capital structure tax rates and depreciation policies. Ebitda or earnings before interest taxes depreciation and amortization is a measure of a companys overall financial performance and is used as an alternative to simple earnings or net income . The ceos guide to understanding ebitda fiflffflflffflfl ebitda is a reliable number that the industry cannot ignore however investors have to use a variety of measurements when buying a company including as demonstrated above testing for the quality of earnings as part of their due diligence. More lenders are attempting to enforce loan defaults and borrowers are fighting back resulting in significant litigation this topic will provide borrowers and lenders counsel with a review of the use of ebitda in loan documentation and financial covenants and best practices for structuring covenants events of default provisions and mac clauses in commercial loans. Understanding ebitda and normalizing adjustments in assessing how to value a lower middle market business buyers will typically focus on adjusted ebitda as their primary metric many sellers incorrectly believe that bottom line net income and or balance sheet asset values are what drive valuations but this is rarely the case unless there
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