Adjusted EBITDA Calculator
Reported vs. adjusted EBITDA, and how much of your add-backs a buyer is likely to accept.
Example scenario—not a forecast or verified benchmark. Enable JavaScript to edit inputs, view charts, save locally and export your analysis.
Example inputs
- Annual revenue
- 5,000,000
- Net income (from your P&L)
- 320,000
- Interest expense
- 60,000
- Income taxes paid by the business
- 90,000
- Depreciation & amortization
- 110,000
- Proposed add-backs
- [{"description":"Owner salary above $150K market GM","type":"owner_comp","amount":120000,"documented":true},{"description":"Legal settlement with former partner","type":"one_time","amount":45000,"documented":true},{"description":"Owner vehicles, travel & family phones","type":"personal","amount":32000,"documented":false},{"description":"Rent paid to owner's LLC above market","type":"related_rent","amount":18000,"documented":true},{"description":"Recruiting fees for a sales hire who left","type":"nonrecurring_ops","amount":25000,"documented":true}]
- EBITDA multiple to value the gap
- 4.5
Example results
Adjusted EBITDA is $820K, but a buyer will likely underwrite about $757K; the $63K gap is worth roughly $281K at 4.5x.
- Reported EBITDA
- $580,000
- Adjusted EBITDA (as claimed)
- $820,000
- Buyer-likely EBITDA
- $757,450
- Add-backs likely challenged
- $62,550
- Enterprise value at risk
- $281,475
- Add-back acceptance rate
- 73.9%
- Buyer-likely EBITDA margin
- 15.1%
What stands out
Add-backs equal 41% of reported EBITDA
Above ~20%, buyers and lenders tend to commission a full quality-of-earnings review and push back line by line.
Most at-risk add-back: Owner vehicles, travel & family phones
Of $32K claimed, expect about $21K to be challenged (35% likely accepted), worth $94K at 4.5x.
1 add-back(s) lack documentation
$32K claimed with no paper trail. Undocumented items are modeled at half their normal acceptance.
Buyer-likely EBITDA margin: 15.1%
vs. 11.6% reported and 16.4% fully adjusted.
Next actions
- Build a support file for owner vehicles, travel & family phones: receipts, card statements and a written explanation. Documentation alone could recover about $11K of EBITDA.
- Reframe or drop weak items like "Owner vehicles, travel & family phones"; claiming aggressive add-backs can cost credibility on the strong ones.
- Commission a sell-side quality-of-earnings review 6–12 months before going to market so the number buyers see is already defended.
Model assumptions & limitations
- Acceptance rates by add-back type are rules of thumb for how buyers and quality-of-earnings providers commonly treat them, not a prediction for any specific deal.
- Undocumented add-backs are assumed to be accepted at 50% of the normal rate.
- The 4.5x multiple is your input; verify against current deals in your industry and size range.
- EBITDA = net income + interest + taxes + depreciation & amortization; no normalization of working capital or capex.