Adjusted EBITDA
Factual definition
Earnings before interest, taxes, depreciation, and amortization after the adjustments a party proposes, usually the seller first. Adjustments run both ways, and the gap between the seller’s adjusted number and normalized EBITDA is what the buyer’s accountants are hired to close.
Related variants EBITDA-T, EBITDAAI, EBITDAC
EBITDA variants
Each is Adjusted EBITDA with one named exclusion, argued in a particular moment.
- EBITDAC appeared in 2020. It added back earnings lost to the pandemic, along with hazard pay and supply-chain costs, to show what the year would have earned without it.
- EBITDA-T followed in 2025 in leveraged finance, backing tariff cost increases out of earnings to present a normalized run rate to lenders.
- EBITDAAI is the 2026 entry, adding savings a company expects from an AI program it has not finished running.
All three are non-GAAP variants with different adjustments, not interchangeable aliases. Each adjustment needs evidence for the sustainable earnings or cost basis under the modeled ownership and operating assumptions. A recurring historical cost may be normalized to a supported replacement cost; projected savings require separate scrutiny.
Adjusted EBITDA in practice
Emeria SASU, a French property services company backed by Partners Group and TA Associates, added 20m euro of estimated efficiency gains to its last-twelve-months EBITDA in September 2026, covering savings it expects over the following two years from an agentic AI rollout.
The company reported leverage of 8.44 times, and Bloomberg calculated about 9.3 times once that unaudited adjustment and roughly 40m euro of other items came out.
Scroll horizontally to read all columns.
| Variant | Year | What it added back | What happened |
|---|---|---|---|
| EBITDAC | 2020 | earnings lost to the pandemic | backlash, and the metric faded |
| EBITDA-T | 2025 | the impact of tariffs | struck from the debt documents |
| EBITDAAI | 2026 | projected savings from an AI rollout | live, and contested |
Source: Bloomberg News: AI Future Savings Is Latest Ebitda Tweak to Jolt Debt Investors.
Normalization clarification
A recurring expense is not automatically ineligible for normalization: above-market owner compensation may be adjusted to a supported replacement cost. Assess each adjustment against evidence for sustainable earnings and the modeled operating assumptions.
How Shayne Fitz-Coy thinks about Adjusted EBITDA
Adjusted is where the finagling lives. Adjusted EBITDA takes EBITDA and removes items that won’t recur under new ownership: an above-market owner salary, a relative on payroll, a one-time legal settlement, the company car.
A useful rule: if an expense recurs, it isn’t an adjustment, it’s the business.
The purpose is honest: show what the business earns as a business, not as an extension of the owner’s household.
The trouble is that every add-back is a claim that a cost will not recur under a new owner, and deals price on a multiple of this number, so each dollar of adjustment is worth several dollars of purchase price. That is why the adjustments column tends to grow as the sale approaches.
Some of those claims are true. The ones that are not are the reason a quality of earnings report exists.
As a buyer, I have yet to see the adjustment number go up after the purchase.
Terms Related to Adjusted EBITDA
EBITDA add-backs · Quality of earnings (QofE) · Lender-adjusted EBITDA · EBITDA variants · Owner compensation normalization · Owner earnings · EBITDA · Normalized EBITDA · Diligence-adjusted EBITDA · Beware the Baseline Year · People Be Lyin · All of the glossary