Reply To: how to manage expectations of sellers in covid times


Ameera Alhawaj

The sale of companies based on EBITDA from pre-covid periods can mislead investors as it does not depict the actual position of a firm. The EBITDA is crucial since it facilitates the comparison of company performance with its competitors in an industry. The formula determines operating profits as a percentage of the generated revenues within a given period. However, the pandemic has caused significant changes that pose uncertainties. Therefore, the future of companies is unclear as some face solvency and leverage issues from prolonged closure. Thus, using the pre-covid EBITDA will be misleading since the current EBITDA would better help determine future performance.

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