See EBITDA as a claim, not a fact

The move: treat EBITDA as an underwriting claim until the evidence proves otherwise. Reported EBITDA is an accounting subtotal. Adjusted EBITDA is a deal construct. Quality of earnings sits between those two ideas and asks whether the number being multiplied is the number a buyer can reasonably expect to own after close. That means testing both removals and additions. A valid normalization removes noise from the maintainable earnings base; an invalid one removes the cost of doing business. The SEC's non-GAAP guidance is useful diligence discipline even outside public-company reporting. It pushes you to ask whether an adjustment removes a…

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