Adjusted EBITDA is EBITDA modified for specified items to present a chosen view of a civil engineering firm’s ongoing operating earnings.
Definition
Adjusted EBITDA starts with EBITDA and changes it for items that an owner, buyer, lender, or adviser proposes to exclude or include when assessing ongoing operations. Adjustments may cover unusual expenses or income, owner compensation, or transaction-related costs, but their treatment depends on the purpose and supporting facts. The calculation should identify each item, its amount, and the reason for the adjustment. Firms may calculate it differently because they use different accounting records, periods, definitions, and judgments about what is recurring. A buyer may reject an adjustment the seller includes, so the figure is a discussion measure rather than an agreed result by itself. It is not cash flow, a measure of project profitability, or a universal accounting figure. Owners comparing results should use a consistent definition and period. For context on valuation, see the guide to valuing a civil engineering firm and quality of earnings.
How owners use it
- Owners compare operating results across periods after documenting proposed adjustments and their support.
- In a sale review, an owner groups each adjustment with records showing its amount, timing, and business context.
- An owner reviews a proposed adjustment schedule with advisers to see how different definitions affect a transaction discussion.
