EBITDA Addbacks in M&A: Wha... | Lippes Mathias LLP

EBITDA Addbacks in M&A: What Buyers Need to Know Before Closing

March 16, 2026 | Corporate Blog

In the average sale process, EBITDA addbacks now account for 29% of adjusted EBITDA. Latest S&P Global survey (a recommended read for private equity and independent sponsors) highlights:

Only 8% of companies ultimately have actual EBITDA that exceeds pre-close management projected EBITDA in the first year post-close.
Aggressive adjusted EBITDA assumptions typically result in a material miss on EBITDA to leverage ratio (in some cases, missing by over 2.3x).
26% of addbacks fall into “synergies and projected cost savings” category (which are often difficult to fully realize and/or may come with additional restructuring/implementation costs).
Take-away: include in your Letter of Intent your specific valuation multiple assumptions and standard language around verifying EBITDA addbacks in diligence.

John Koeppel's commentary on "EBITDA Addback Study Shows Increased Debt Projection and Leverage Misses," S&P Global, February 25, 2026.

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