---
title: "What Is Adjusted EBITDA? Private Equity Glossary"
description: "Adjusted EBITDA is EBITDA after add-backs and other changes that remove unusual, one-time or owner-specific items to show normal earnings."
url: https://capstreet.multisites.ai/glossary/adjusted-ebitda
publisher: Capstreet
phone: +1-713-332-2700
contact: https://capstreet.multisites.ai/contact
---

Valuation

# Adjusted EBITDA

Adjusted EBITDA is EBITDA after add-backs and other changes that remove unusual, one-time or owner-specific items to show normal earnings.

Adjusted EBITDA starts with regular [EBITDA](https://capstreet.multisites.ai/glossary/ebitda) and then adds or removes items so the number reflects normal, ongoing operations. It includes [add-backs](https://capstreet.multisites.ai/glossary/add-backs) such as one-time costs, owner perks and unusual gains.

For example, a company reports $4.0 million of EBITDA. It adds back $0.4 million of one-time and owner costs and removes $0.1 million of one-time income. Adjusted EBITDA is $4.3 million.

This number is usually the one that sets price, so both sides care about it. Sellers want to defend every adjustment. Buyers want to test every one. A [quality of earnings](https://capstreet.multisites.ai/glossary/quality-of-earnings) report is often the tie-breaker.

Keep your adjustments honest and documented. Overreaching can cost trust and slow a deal. For the full picture on price, read [how private equity values a business](https://capstreet.multisites.ai/guides/how-private-equity-values-a-business).

[Read nextHow private equity values a business](https://capstreet.multisites.ai/guides/how-private-equity-values-a-business)

## Related terms

-   [EBITDA](https://capstreet.multisites.ai/glossary/ebitda)
-   [Add-Backs](https://capstreet.multisites.ai/glossary/add-backs)
-   [Quality of Earnings](https://capstreet.multisites.ai/glossary/quality-of-earnings)

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