Business valuation calculators
Adjusted EBITDA Calculator
Move from reported profit to an indicative maintainable adjusted EBITDA
In short
Adjusted EBITDA is your reported EBITDA restated to show the maintainable profit a new owner would inherit. You add back personal, genuinely one-off and above-market costs, then deduct costs a buyer would have to incur, such as replacing the owner. Buyers apply a sector multiple to this figure rather than to statutory profit.
Buyers price UK SMEs on maintainable adjusted EBITDA, not the profit figure in your statutory accounts. This calculator builds the bridge line by line so you can see what a buyer might accept and what they are likely to challenge.
Part of the business valuation calculators suite from BusinessValuation.co.uk. Your result is saved in this browser, so you can compare it with your other calculator results.
How to use this calculator
Start with the profit figure from your latest reliable annual or management accounts. Add only costs that are genuinely personal, exceptional or above market. Deduct any costs a buyer would need to incur that are not already reflected in the accounts.
Your calculation
Indicative adjusted EBITDA
£727,000
- Reported EBITDA
- £730,000
- Add total add-backs
- £72,000
- Less total deductions
- -£75,000
- Indicative adjusted EBITDA
- £727,000
- Change against reported
- -£3,000
- Percentage change
- -0.4%
Calculation bridge
- Reported EBITDA£730,000
- Add-backs£72,000
- Deductions£75,000
Adjusted EBITDA = Reported EBITDA + Add-backs - Deductions
Before you rely on this
- An adjustment is not automatically accepted by a buyer. Each item must be genuine, evidenced and relevant to the costs a new owner would inherit.
- Every add-back must survive buyer diligence. Undocumented adjustments are usually removed during the process.
Next steps
Your result is above and stays visible. If it would help, we can send it to you or review it with you confidentially.
Important information
This calculator provides general, indicative guidance based solely on the information entered. It is not a formal business valuation, tax calculation, legal opinion or recommendation to accept or reject an offer. Actual value and sale proceeds depend on detailed financial, commercial and transaction-specific factors.
How this calculation works
- Reported EBITDA = operating profit + depreciation + amortisation
- Adjusted EBITDA = reported EBITDA + evidenced add-backs − buyer-side deductions
- Uplift % = (adjusted EBITDA − reported EBITDA) ÷ reported EBITDA
Worked example: owner-managed engineering company
| Operating profit | £620,000 |
|---|---|
| Depreciation and amortisation | £80,000 |
| Reported EBITDA | £700,000 |
| Add back: owner pay above market rate | +£90,000 |
| Add back: evidenced personal motor and travel costs | +£18,000 |
| Add back: one-off tribunal and legal fees | +£25,000 |
| Deduct: cost of a general manager to replace the owner | −£85,000 |
| Indicative adjusted EBITDA | £748,000 |
The bridge adds £133,000 of add-backs and deducts £85,000 of replacement management cost, producing £748,000. On a 5.0x multiple that is a £240,000 difference in indicative enterprise value against the reported figure, which is why every add-back has to be evidenced.
What each input means
- Starting point
- Either operating profit from your latest reliable accounts, or a reported EBITDA figure you already trust. Use audited or reviewed figures where they exist.
- Depreciation and amortisation
- Non-cash charges taken from the notes to the accounts, added back to reach EBITDA.
- Excess owner and family remuneration
- Only the amount above a market salary for the work actually performed. Total pay is not added back.
- Personal or non-business expenses
- Costs a new owner would not incur, supported by invoices or payroll records.
- One-off legal, restructuring and exceptional items
- Genuinely non-recurring costs. Items that appear every year are recurring, whatever they are labelled.
- Above-market related-party rent
- The excess over an open-market rent for comparable premises, evidenced by comparison.
- Evidenced annualised cost savings
- Only savings already contracted or implemented and capable of annualisation.
- Replacement management cost
- The cost of hiring someone to do the work the owner currently does, deducted where the owner is operationally involved.
How to read the result
The result is an indicative maintainable earnings figure. It is the base a buyer would apply a multiple to, so a change here moves headline value by roughly the multiple times that change. It is not a valuation on its own, because the multiple depends on the quality and risk of the earnings.
What can materially change the result
- Whether each add-back is documented well enough to survive diligence.
- How operationally involved the owner is, which sets the replacement management deduction.
- Whether the accounts used are audited, reviewed or unreviewed management figures.
- Whether earnings are stable, growing or recovering from a weak year.
- Related-party arrangements for premises, vehicles or services.
- Revenue quality: contracted, recurring or project-based work behind the profit.
Limitations
- It does not apply a multiple and does not produce a business value.
- It does not test whether a buyer will accept any individual adjustment.
- It does not normalise for a weak or exceptional trading year across multiple periods.
- It does not calculate tax or sale proceeds.
When this calculator is appropriate
Use it when you want to understand the earnings figure buyers will start from, before a sale, an MBO, a refinancing or a valuation instruction.
When it is not appropriate
Do not use it as the earnings figure in an HMRC submission, a court report or a signed valuation. Those require normalised earnings across several periods with disclosed working.
Bottom line
Adjusted EBITDA, not statutory profit, is the number buyers price. Build the bridge with evidence for every line, and deduct the cost of replacing yourself.
Questions owners ask
- What is adjusted EBITDA?
- Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, restated to show the maintainable profit a new owner would inherit. Personal, exceptional and above-market costs are added back, and costs the buyer must incur are deducted.
- What is the difference between operating profit and EBITDA?
- Operating profit is stated after depreciation and amortisation. EBITDA adds those two non-cash charges back, which is why buyers start there before applying a sector multiple.
- Which add-backs do buyers normally accept?
- Evidenced personal expenses, genuinely one-off legal or restructuring costs, exceptional bad debts, above-market related-party rent and excess owner or family remuneration are the most commonly accepted, provided each is documented.
- Should owner remuneration be added back in full?
- No. Only the excess above a market salary for the work actually performed should be added back. If the owner runs the business day to day, the cost of replacement management must be deducted.
- Can projected savings be included?
- Only where a saving is already contracted or implemented and can be annualised with evidence. Speculative future savings are routinely rejected in diligence.
- Why might a buyer reject an adjustment?
- Usually because it is not evidenced, because it recurs every year despite being labelled one-off, or because the cost would still be incurred under new ownership.
- Is this result a formal valuation?
- No. It is an indicative calculation from the figures you entered. A formal valuation requires normalised earnings, evidenced comparable transactions and a worked equity bridge.
Related reading
Free business valuation
A senior adviser reviews your adjusted earnings and gives a written indicative range where the situation warrants it.
Where owners usually go next
- Business Value Gap Calculator
Compare what those earnings support today with the value you are aiming for.
- Offer Sense-Check Calculator
Test an offer against the adjusted earnings figure rather than reported profit.
Written and reviewed by Tony Vaughan, founder and lead adviser, BusinessValuation.co.uk.·Last reviewed: September 2026·How we produce these figures
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