Understanding EBITDA for Small Business Valuation
Planning to sell your agency one day? Buyers don't care about your revenue; they care about your EBITDA.
By Dylan Perez · Investment Banker
· 1 min read
Strategy
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the proxy for your business's raw cash-generating potential.
Small businesses typically sell for a multiple of EBITDA (e.g., 3x to 5x). Every dollar you add to your bottom line adds $3-$5 to your exit price. This is why cost control is literally an investment in your future wealth.