Search Fund Jargon Translator

Clear, plain-English definitions of ETA and dealmaking terms, with practical notes and examples.

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EBITDA

A measure of a company's overall financial performance, used as an alternative to net income in some circumstances. It is a proxy for operating cash flow.

Seller's Discretionary Earnings (SDE)

A measure of a business's total financial benefit to one full-time owner-operator. It's calculated by taking EBITDA and adding back the owner's salary and other discretionary expenses.

Add-backs

Expenses that are added back to a company's net income or EBITDA to arrive at an adjusted figure that better represents its true, ongoing profitability.

Capital Expenditures (CapEx)

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment.

Free Cash Flow (FCF)

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Compound Annual Growth Rate (CAGR)

The mean annual growth rate of an investment over a specified period of time longer than one year.

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