{"id":5479,"date":"2026-02-05T08:00:00","date_gmt":"2026-02-05T07:00:00","guid":{"rendered":"https:\/\/relaycf.nl\/?p=5479"},"modified":"2026-02-04T10:14:06","modified_gmt":"2026-02-04T09:14:06","slug":"what-are-ebitda-normalisations","status":"publish","type":"post","link":"https:\/\/relaycf.nl\/en\/kennisbank\/wat-zijn-ebitda-normalisaties\/","title":{"rendered":"What are EBITDA normalisations?"},"content":{"rendered":"

EBITDA normalisations are adjustments to the income statement that filter out costs or revenues that are not representative of normal operations. These adjustments show a company's \u2018true\u2019 earning power by eliminating one-off items, owners' personal expenses and other non-operating costs. In business valuations and M&A transactions, normalised EBITDA figures are the basis for reliable valuations.<\/p>\n

What exactly are EBITDA normalisations?<\/h2>\n

EBITDA normalisations<\/strong> are systematic adjustments to reported EBITDA to provide a clean picture of a company's operating performance. These adjustments eliminate costs and revenues that do not arise from normal operating activities.<\/p>\n

The process focuses on identifying items that distort the company's actual earning power. Consider one-off reorganisation costs, personal expenses of owners through the company or incidental income from property sales.<\/p>\n

In business valuation, this purification is crucial. Buyers want to know what profits the company can structurally generate, not what was achieved in one specific year due to coincidences. Normalised EBITDA is therefore the basis for valuation multiples and future cash flow projections.<\/p>\n

Why are EBITDA normalisations important in business sales?<\/h2>\n

EBITDA normalisations strengthen sellers' negotiating position by making structural profitability clear. Without them, incidental costs or personal expenses can undervalue business performance, resulting in lower bids.<\/p>\n

Buyers use normalised figures for their own valuation analyses. A professionally set-up normalisation shows that the seller knows his business well and has prepared seriously for the sales process<\/a>.<\/p>\n

The adjustments create transparency about which costs disappear after acquisition and which revenues are structural. This helps both parties form realistic expectations about future performance and supports a fair valuation.<\/p>\n

Which costs are usually normalised in EBITDA calculations?<\/h2>\n

The most common normalisations concern one-off costs<\/strong> such as reorganisations, legal disputes or system implementations. These items are not representative of ongoing operations and are therefore filtered out.<\/p>\n

Personal expenses of owners constitute a second category. This includes private cars, family members on the payroll with no operational function or entertainment expenses above market levels.<\/p>\n

Salary adjustments to market levels are also common. DGA salaries are often below or above market levels for tax reasons. Normalisation brings them back to what a professional manager would cost.<\/p>\n

Other common adjustments:<\/p>\n