The offer is 6× EBITDA. The buyer is multiplying a different number.

Most of the value in a sale is won or lost in the earnings figure the multiple attaches to, long before anyone argues about the multiple itself.

By Steve 5 min read
Abstract bridge artwork for The offer is 6× EBITDA. The buyer is multiplying a different number.

Owners preparing to sell tend to fixate on one number: the multiple. Six times, seven times, four and a half. It is the number that gets repeated in the trade press, compared at industry dinners, and used as shorthand for whether a business is any good. It is also, in most transactions, the less important of the two numbers being multiplied. The other number is adjusted earnings: the buyer’s reconstruction of what the business actually earns once the owner’s personal arrangements, non-recurring items and below-market costs are stripped out and…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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