CONFUSED ABOUT EBITDA CALCULATION
This is from an offering memorandum provided by the broker. It appears he's calculating EBITDA by adding interest, depreciation and amortization to the 'ordinary income' line. Am I misunderstanding something? By definition, that seems to be very much not the EBITDA.
Total Operating Expenses Shown $666,500
Less: SDE (assuming all hitting OpEx) $(341,610)
Less: Rent (assuming all hitting OpEx) $(117,340)
Less: Interest (Added Back) $(13,250)
Less: D&A (Added Back) $(60,000)
Other Operating Expenses (Incl. Headcount) $134,300
I'm probably missing something but it seems very low to me as it should include all other expenses (any other opex headcount/business insurance/IT costs/marketing/etc.) and for any business you are going to try to grow it doesn't seem like there is much there for you to start with
(again may be right depending on business you are looking at).
Of course with the discrepancy between SDE and EBITDA, I wonder what the true numbers are. Something is being normalized that we aren't seeing.