3 ms·
Isn't EBITDA the number of greater interest to institutional investors such as Private Equity funds? Interest could be irrationally expensive for a business, t
by lumost 5y ago
Isn't EBITDA the number of greater interest to institutional investors such as Private Equity funds?
Interest could be irrationally expensive for a business, taxes could be higher than they should be if the entity is not setup correctly, Amortization represents assets which could be sold off.
These are all things that PE firms can fix/work on to one extent or another with financial engineering. They can't really grow cash flow.
- mywittyname 5y agoPE usually look to load up the company they acquire with debt to cover their purchase price. EBITDA gives them a good idea of how much debt the company can service via cashflow.