Adjusted EBITDA Explained: Why Your Business May Be Worth More Than You Think

Your financial statements say your business earned $1 million in EBITDA. A buyer looks at the exact same business and calculates $1.1 million. Same company. Same books. Different number. Why? Welcome to the world of Adjusted EBITDA. In this video, I break down how buyers evaluate EBITDA adjustments, why certain expenses may be added back, and why some adjustments can actually reduce your reported earnings. No finance degree required! WHAT YOU'LL LEARN: • What Adjusted EBITDA is and why buyers use it • How one-time expenses can affect reported profitability • Why cash versus accrual accounting can change earnings • How owner compensation adjustments work We'll walk through three hypothetical examples and bring everything together in a simple EBITDA bridge. 📍 VIDEO CHAPTERS 0:00 — Introduction: Same Business, Different Number 0:23 — Meet Reagan 1:06 — What Is Adjusted EBITDA? 1:56 — Example 1: One-Time Legal Expenses 3:06 — Example 2: Cash vs. Accrual Accounting 4:20 — Example 3: Owner Compensation Adjustments 5:32 — Cheat Sheet 📄 FREE ADJUSTED EBITDA CHEAT SHEET I've put together a one-page cheat sheet summarizing the three examples and showing how they affect Adjusted EBITDA. https://drive.google.com/file/d/1qmWv... 🎥 NEW TO EBITDA? If you're unfamiliar with EBITDA itself, check out my first video, where I explain what it means, why buyers care, and why it isn't the same thing as cash flow.    • What Is EBITDA? Why Business Buyers Care A...   ABOUT ME & REAGAN EXPLAINS I'm Reagan Freeman. After spending years evaluating and acquiring businesses on the buy-side, I now help business owners navigate the selling process at UHR Advisory. Many business owners are exceptional at building and operating their companies, but selling a business requires an entirely different set of skills. For some, it's a transaction they'll only experience once in their lives. That's why I started Reagan Explains — to make M&A, business valuations, and the process of selling a company easier to understand, without all the Wall Street jargon. Whether you're a business owner considering an eventual sale or a finance professional looking for a refresher, you're in the right place. Learn more about UHR Advisory: https://uhradvisory.com If you found this helpful, consider subscribing! More practical, plain-English M&A content is on the way. --- DISCLAIMER: This video is for general educational and informational purposes only and does not constitute personalized financial, investment, legal, or tax advice. All examples are illustrative. Actual EBITDA adjustments depend on the facts, supporting documentation, and transaction-specific considerations. #AdjustedEBITDA #BusinessValuation #MergersAndAcquisitions