EBITDA, le standard (trop) retouché des investisseurs classiques
## EBITDA: A Frequently Adjusted Standard Among Traditional Investors
EBITDA: A Frequently Adjusted Standard Among Traditional Investors
Over the years, EBITDA has been a universal benchmark for assessing a company's financial performance. It remains a central indicator for traditional investors, particularly in private equity, due to its simplicity in calculation, comparison, and projection. However, beneath its apparent simplicity, EBITDA may conceal more than it reveals, and as operational transparency becomes a renewed requirement, its relevance warrants reevaluation.
EBITDA = Operating Profit + Depreciation + Provisions
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures the company's gross operational performance before financing choices, tax expenses, and asset depreciations. It assesses the ability to generate results before non-cash items and non-direct operations .
Why Is EBITDA a Reference for Investors?
EBITDA facilitates comparisons between companies of various sectors and sizes, independent of their financial structure or tax policy.
EBITDA multiples (generally x6 to x12 in the midmarket) are used in LBO operations, industrial sales, or valuations of mature companies.
A Quick Proxy for Operational Profitability
It provides an approximate picture of cash generated by the activity, useful for quick analyses or screening of files.
EBITDA forms the basis for calculating bank covenants (e.g., net debt/EBITDA ratio) in structured financing.
Why Can It Be Insufficient (or Misleading)?
EBITDA does not reflect working capital needs, investments (CAPEX), or debt repayment.
“Adjusted” or “Normalized” EBITDA may include numerous adjustments: "exceptional" costs, growth expenses, restructuring fees, sometimes turning it into a marketing indicator.
A company with positive EBITDA may have a significantly negative net result or rapidly depleting cash.
Over the years, EBITDA has been a universal benchmark for assessing a company's financial performance.
Becomes Obsolete in Subscription-Intensive Models
In SaaS or marketplaces, indicators like ARR, gross margin, cash conversion, or capital efficiency are more relevant.
Sector Target EBITDA Margin (%)
Mature B2B SaaS 20 – 35%
Digital Services 15 – 25%
E-commerce 5 – 15%
On-premise Software
30%
Edtech / Healthtech < 10% (early-stage)
In early-stage, a negative EBITDA margin is tolerated. From Series B, investors expect a clear trajectory toward EBITDA break-even.
Compare with Other Profitability Indicators
– Identify significant discrepancies Clarify Adjustments
– Avoid multiplying "exceptional adjustments" at each round
– Justify elements excluded from the calculation with consistency Cross-reference with BFR and CAPEX Structure
– High EBITDA but negative cash flow = signal of unbalanced management Track Over 12 to 24 Rolling Months
– To smooth out temporary effects and identify structural trends
EBITDA remains an essential metric for traditional investors, but its usage should be framed. While it allows a simplified view of performance, it can also conceal model weaknesses or cash flow tensions. In the current environment, it is useful as an entry point but is no longer sufficient alone . Discerning investors now look beyond EBITDA , focusing on what truly matters: cash, recurrence, and operational efficiency.
D’après FrenchWeb.