Normalized earnings for valuation.

Adjusted EBITDA adds back non-recurring or owner-specific expenses to reported EBITDA to show the business's 'true' ongoing earning power. Standard add-backs: owner excess compensation, one-off legal costs, acquisition-related costs, stock-based compensation, and exceptional items like lease break fees or restructuring.

Reported EBITDA 2M, plus 300k owner excess (founder taking above-market salary), 100k one-off legal, 50k acquisition costs, 150k SBC = 2.6M adjusted EBITDA. That 30% uplift directly moves valuation: at 8x multiple, the 600k adjustment adds 4.8M to enterprise value.

Buyer pushback on add-backs is normal. Aggressive add-backs (ongoing expenses dressed as one-offs, owner perks that replacement management would also take, questionable 'non-recurring' items) get challenged. Defensible add-backs are ones with clear evidence: excess comp supported by industry benchmarks, legal costs tied to a specific matter now closed, acquisition costs documented with counterparty.

A worked example

Try the defaults: reported ebitda of 2,000,000, one-off costs of 0, owner excess compensation of 300,000, non-recurring legal of 100,000. The tool returns 2,600,000.00. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Reported EBITDA, One-Off Costs, Owner Excess Compensation, Non-Recurring Legal, and Acquisition Costs. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

The formula behind this

Adjusted EBITDA = reported EBITDA + sum of add-backs. Uplift % = add-backs ÷ reported EBITDA × 100. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.