EBITDA
Agency glossary · Updated July 2026
Definition
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a measure of an agency’s core operating profitability that strips out financing and accounting effects, and it is the number most often used to value an agency when it is sold.
Net profit + interest + taxes + depreciation + amortizationWhy it matters
Buyers value agencies as a multiple of EBITDA, so it is the number that matters most at exit. A cleaner, higher, more predictable EBITDA raises the sale price.
For a small, debt-free, cash-basis agency, EBITDA is close to net profit. It becomes important as the agency grows or prepares to sell.
What does the EBITDA value tell you about an agency?
It tells you what the business earns from operating, before financing and tax decisions distort the picture, which is why buyers price agencies as a multiple of it. The EBITDA value is most useful as a comparison: two agencies with identical revenue can have very different EBITDA because one carries debt, expensive premises or an owner drawing a large salary. For a small agency, the number to check alongside it is whether the owner's own pay is inside the figure, because leaving it out flatters the result.
Related terms
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