hey guys - what's the difference between financeable EBITDA and.... non financeable EBITDA? and what are the differences in the calcs? been reviewing some buyside / LBO / lender model materials and keep seeing this term "financeable ebitda"
thanks all!
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Financing EBITDA includes a whole host of BS adjustments that net leverage will be based off of, in an attempt to maximize debt funding from a sponsor for an LBO. It can be a LOT of adjustments.
An example is "booked but not billed" which is credit for bookings that are not cash flowing yet, but will be in a few months or a year.
Literally you are giving yourself credit for something that doesn't exist yet. Other things are like "cost savings initiatives" that you'd plan to undertake in the next year, etc, that again, literally don't exist now, and are on a "best faith effort" from management.
Other things include sketchy "one-time" events that are arguable at best, etc.
So yeah, kind of hilarious but also a bit egregious.
The crazier thing is most sellside QoEs now include these ridiculous adjustments and expect buyers to put a multiple on the “potential” earnings from future pricing initiatives and cost savings.
Was about to say this, but you beat me to it.
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