Adjusted EBITDA

Adjusted EBITDA is EBITDA after "normalisation" adjustments that remove unusual income or expenditure and reflect a post-sale cost base. Common adjustments include replacing a founder's salary with a market-rate managing-director salary, removing exceptional professional fees, or adding back one-time IT upgrades. A robust reconciliation explaining each adjustment is a central part of a quality-of-earnings report and can materially improve the multiple a buyer is willing to pay.