EBITDA

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the primary operating performance metric used in M&A and business valuation — the standard denominator for transaction multiples (EV/EBITDA). Its normalisation — restating non-recurring items, above-market management remuneration and intragroup transactions — is the central objective of any financial due diligence. Normalised EBITDA should reflect the sustainable, recurring earnings power of the business and serve as the basis for multiple-based valuation and DCF modelling. It differs from the French EBE (Excédent Brut d'Exploitation) in its exclusion of certain financial operating items.

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Example: a Swiss industrial SME reports accounting EBITDA of CHF 2.1 million. After restatement of non-recurring charges (+CHF 280,000), above-market shareholder-manager remuneration (+CHF 200,000) and below-market intragroup rent (-CHF 150,000), normalised EBITDA is CHF 2.43 million — the basis for applying a 7.5x EV/EBITDA multiple, yielding an enterprise value of CHF 18.2 million.

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At Hectelion, constructing a robust and defensible normalised EBITDA is the foundation of every valuation and due diligence engagement.