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Free EBITDA calculator with add-backs.

Walk from reported operating profit to normalised EBITDA, including the add-backs buyers and valuers commonly accept for owner-operated businesses. Used properly, this is usually the single most impactful input into what a buyer will pay.

What is EBITDA, and why “normalised”?

EBITDA is Earnings Before Interest, Tax, Depreciation, and Amortisation – a measure of operating cash flow before financing and accounting non-cash items. It’s the profitability metric most buyers and valuers look at for going-concern businesses.

Normalised EBITDA adjusts for expenses that a new owner wouldn’t incur, or that you’re running through the business for tax reasons but aren’t truly operational costs. Done honestly, this reveals the real underlying profitability. Done dishonestly, buyers see through it during due diligence. The line is: only add back things you can defend with documentation.

Your financials

Reported figures

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Total revenue over the trailing 12 months.

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Earnings before interest and tax, from your P&L. Not net profit.

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Non-cash depreciation and amortisation. Shown on your P&L.

Common add-backs

Expenses a new owner wouldn’t incur. Add only what you can defend with documentation.

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If you pay yourself 80k above what a replacement manager would earn, that 80k goes here.

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Owner/family vehicles, phones, memberships run through the business.

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Spouse or family on payroll earning above market rate for the role.

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Rent paid to a related entity above the open-market rate.

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Legal fees for a one-time case, consultancy for a project that’s done, restructure costs.

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Anything else documented and defensible. Don’t pad.

Valuation reference (optional)

Applies a single industry EBITDA multiple. The full valuation calculator does a three-method blend.

Your normalised EBITDA appears here

Enter your revenue and operating profit to see the walk from reported to normalised EBITDA.

Add-backs are only credible to a buyer if documented. Keep records of the “normal” market rate for owner salary, rent, and family employment. In formal due diligence, buyers’ analysts will challenge each add-back and remove any they can’t verify. Our Detailed report applies more sophisticated normalisation and produces the DCF buyers expect.

Reference

Which add-backs will survive due diligence

Almost always accepted

  • Above-market owner compensation. The gap between what you pay yourself and what a replacement manager would earn. Evidenced by market salary benchmarks for your role + scale.
  • One-off professional fees. Legal, tax, or consultancy costs for a specific transaction or event that won’t repeat.
  • Personal vehicles and memberships. If the owner’s vehicle, phone, or club membership are on the business P&L.
  • Related-party rent above market. If you lease from a family-owned entity at above-market rates.

Sometimes accepted, always challenged

  • Family members on payroll. Only the portion above market rate for the actual work. If your son is on the books but doesn’t work, the whole salary is an add-back.
  • Owner travel and entertainment. The portion that’s personal vs genuinely business. Expect granular documentation.
  • Discretionary owner benefits. Pension contributions above the industry norm, private health above standard.

Rarely accepted

  • “Lost” revenue from a bad year. Buyers price what actually happened, not what could have.
  • Projected cost savings from a buyer’s synergies. Those belong to the buyer, not the seller.
  • Exceptional investment that hasn’t paid off yet. If you invested heavily in marketing and revenue hasn’t caught up, that’s a timing risk, not an add-back.

Other free tools

Related calculators

Quick valuation calculator

Apply the EBITDA you’ve calculated to a three-method valuation range.

SDE calculator

Seller’s Discretionary Earnings – more appropriate for owner-operated businesses under $5M.

Value Builder scorecard

Score your business across the 8 drivers that most determine market value.

EBITDA questions

What owners ask about normalisation

EBITDA is the wrong metric for (a) owner-operated businesses under roughly $5M revenue – use SDE instead, (b) asset-heavy businesses where capex is a meaningful part of running the business, (c) pre-profit or early-stage businesses where growth reinvestment suppresses EBITDA, and (d) financial-services or real-estate businesses where the cash flow structure differs fundamentally from an operating business. In each case, revenue multiples or DCF tend to be more useful.
Add-backs that a buyer’s analyst can’t document down will be removed from the valuation, often along with a credibility hit that makes them remove others too. The rule of thumb: only add back what you can defend with a paper trail (payroll records showing above-market salary, lease agreement showing related-party terms, invoices showing one-off project costs). A well-documented add-back adds full value. A speculative one subtracts trust.
Terminology varies. In this calculator, “reported EBITDA” is Operating Profit + D&A straight from your P&L. “Normalised EBITDA” (also called “adjusted EBITDA”) is reported EBITDA plus legitimate add-backs. Buyers will quote their own adjusted EBITDA figure after their due diligence, and it will usually be lower than the seller’s. The gap is negotiable.
Historically yes, for tech companies especially. In the past few years sophisticated buyers have increasingly treated share-based compensation as a real ongoing cost and refused to add it back. For SME valuations where SBC isn’t typically material, it’s usually not worth the fight. For growth-stage companies with meaningful SBC, raise it cautiously and be prepared to negotiate.

Turn this number into a full valuation.

A normalised EBITDA is a single input. A full report turns it into a defensible range across four methodologies with working for every number.

Standard – $199 Detailed – $399