EBITDA

Definition

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) measures how much a company earns from operations before financing and accounting choices. For an SME transaction that matters because the figure is independent of how the business was financed, which depreciation schedule was chosen, or what tax regime applied.

In practice you start from operating profit (EBIT) on the P&L and add back depreciation and amortization. The resulting EBITDA is a raw measure — to make it M&A-useful you normalise owner compensation, non-recurring items, and intercompany flows. That normalised figure is multiplied by a sector multiple (EV/EBITDA) to land on an enterprise value.

Worked example

An Antwerp IT-services firm booked €280k net income in 2025, paid €70k corporate tax, €25k interest on a bank loan, and recorded €110k depreciation. Raw EBITDA = 280 + 70 + 25 + 110 = €485k. After normalisation (owner salary +€40k to market, one-off relocation cost -€35k) normalised EBITDA = €490k. At a 5.2x sector EV/EBITDA → enterprise value ≈ €2.55m.

When it matters

For most Benelux SMEs between €1m and €25m revenue, EBITDA is the only metric buyers, lenders, and advisors all use on the same yardstick. Below €1m revenue, SDE (Seller's Discretionary Earnings) is usually a better fit because owner compensation is out of proportion to profit.

Frequently asked

What is a typical EBITDA multiple for a Belgian SME in 2026?

In 2026, EV/EBITDA for Belgian SMEs ranges from 2.5x to 6.0x depending on sector, growth, and recurring-revenue share. Restaurants average 2.8x, IT services 5.2x, industrial manufacturing 3.9x. Source: Upswitch Multiples Index 2026.

What is the difference between EBITDA and EBIT?

EBIT is operating profit including depreciation; EBITDA adds depreciation back. EBITDA is therefore always higher than EBIT and is preferred in M&A because depreciation policy varies widely across companies.

Should I normalise my EBITDA before using it in a sale?

Yes. Unadjusted EBITDA from the P&L almost always over- or understates the cash flow available to a new owner. At minimum, normalise owner compensation, non-recurring items, and intercompany flows.

Does EBITDA work for every sector?

No. For asset-heavy sectors (manufacturing, transport) capex matters — use EBITDA-capex or EBIT margins. For SaaS, ARR multiples fit better; for very small businesses, SDE.