Debt to EBITDA is a metric that measures deal structure, leverage, and exit value creation.
Debt to EBITDA helps you test whether the transaction creates value after integration and debt service. Helpful formula: EBITDA = revenue - operating costs (excluding interest, taxes, depreciation and amortization).
Calculate the ratio by dividing total debt by annual EBITDA.
An acquirer models deal impact on leverage and returns over five years. Debt to EBITDA is used as the anchor to compare conservative and ambitious scenarios.
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