EBITDA Bridge
Definition
A reconciliation document that maps founder-reported EBITDA to a Fund's maintainable EBITDA, identifying each adjustment per IPEV Section 3.4 with documented evidence. The bridge typically traces non-recurring spend, discontinued lines, one-time items, founder compensation normalisation, and pro-forma adjustments — each with source documentation (board minutes, contracts, payroll) and the known-and-knowable evidence flag. Without a bridge, the gap between founders' EBITDA and the Fund's maintainable EBITDA produces the discount that writes itself at term sheet — typically 20–35% on a multiple basis. With a bridge, the founder defends the maintainable number rather than negotiating the optimised one. The capitalisation-reclassified EBITDA extends the bridge by one further step: opex categories with proven investment characteristics (R&D, brand-build, CAC with proven payback) move to amortisation, widening EBITDA by a further 10–25% under management accounting.
Complementary Terms
Concepts that frequently appear alongside EBITDA Bridge in practice.
The International Private Equity and Venture Capital Valuation Guidelines (IPEV) are the global standard PE and VC funds use to determine Fair Value of unlisted investments. Issued by the IPEV Board, the guidelines set out how a fund's Valuer documents and defends each portfolio company's Fair Value at every measurement date — typically quarterly.
An intangible investment — R&D, brand-build, customer-acquisition with proven payback, software development — that has been moved from operating expense to balance-sheet asset and amortised over its useful life under management accounting. Statutory accounting rarely permits the same treatment for internally-generated intangibles: IAS 38 imposes six conservatism criteria that are difficult to meet in practice; ASC 730 forces immediate expensing under US GAAP.
A founder-side preparation discipline that builds the evidence base a Fund's Fair Value process needs at every measurement date — before the term sheet conversation begins. Distinct from valuation negotiation: a Fair Value defence isn't about arguing for a higher number, it's about producing the inputs the Fund's quarterly Fair Value model will consume for the duration of the investment.
Put this knowledge to work
Use Opagio's free tools to measure and grow the intangible assets that drive your business value.