EBITDA

Definition

Earnings Before Interest, Taxes, Depreciation, and Amortization. A widely used measure of a company's operating profitability, stripping out financing, tax, and accounting decisions to focus on core business performance. In PE, EBITDA is the standard metric for sizing deals and computing valuation multiples (e.g., "5x EBITDA").

Context

In Ep. 21, Glenn Oken defines Mangrove's investment lens as companies with $3-10M EBITDA for platforms. He also notes that in 1989, deals traded at 4-5x EBITDA; today, multiples are significantly higher. The firm's internal operating partners focus on growing EBITDA through manufacturing optimization, pricing, go-to-market improvements, and add-on acquisitions.

Related Terms

• Enterprise Value — typically expressed as a multiple of EBITDA
• Quality of Earnings — validates accuracy and sustainability of reported EBITDA
• Lower Middle Market — defined partly by EBITDA range