Understanding EBITDA and Owner Salaries

Most people hear about spectacular acquisitions made by strategic acquirers or giant private equity groups. But the reality is, you’re likely to sell your company to a small business in your sector that nobody outside your industry has ever heard of. 

In our latest episode of Built to Sell Radio, part of our Inside the Mind of an Acquirer series, we get inside the head of Kristi Herold. Kristi is the founder of JAM, a company based in Toronto that connects people through adult recreational sports leagues and corporate team-building events. 

Kristi has successfully completed 11 acquisitions, making her a prime example of how small businesses buy other small companies.  

You’ll discover how to: 

Understand what small business acquirers look for in potential acquisition targets.
Learn the key steps one small business owner uses to prepare for an acquisition.
Recognize the deal structures small acquirers use to ensure favorable terms.
Protect your interests when selling to another small business owner.

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“It amazes me how widespread the use of EBITDA has become. People try to dress up financial statements with it.”

“We won’t buy into companies where someone’s talking about EBITDA. If you look at all companies, and split them into companies that use EBITDA as a metric and those that don’t, I suspect you’ll find a lot more fraud in the former group. Look at companies like Wal-Mart, GE and Microsoft — they’ll never use EBITDA in their annual report.”

-Warren Buffett