Right in the Middle Market
Right in the Middle Market
Ep27: EBITDA...It Takes Some Adjustment
EBITDA is a phrase you often hear when talking about size, profitability and valuation of a company - but it actually isn't a technical accounting term. On today's episode, we'll talk about what exactly EBITDA is, why it's used, the rationale and methodology for adjusted EBITDA and EBITDA multiples.
We'd love to hear your feedback! Email us at podcast@gaffingroup.com.
Looking for more episodes or playlists? Find them on our Right In the Middle Market website, https://www.rightinthemiddlemarket.com.
For more information about us, or to inquire whether we could help you and your business, go to the website of SLS Capital Advisors and The Gaffin Group, https://www.slscapitaladvisors.com.
EBITDA is a phrase you often hear when talking about size, profitability and valuation of a company. But it actually isn't a technical accounting term. Probably most famous and one of the big reasons business owners really care about EBITDA, is the EBITDA multiple, that is often used to approximate the expected valuation of a company. It sounds simple, but like most things, well, it just isn't. On today's episode, we'll talk about what exactly EBITDA is, why it's used, especially since it isn't a formal accounting term, the rationale and methodology for adjusted EBITDA and the perspective of buyers and investors. Welcome to Right in the Middle Market, a podcast about pragmatic perspectives on running, growing and selling your business. We talk about the challenges, decisions, and most importantly, the actions business owners can take to create long term value in their companies. Welcome to Right in the Middle Market. I'm Stephanie Chambliss Gaffin. And I'm here today with my co host Mark Gaffin. When people are talking about selling their company, or how well their company is doing, or the size of their company, they often talk about EBITDA. Except when they don't and then they talk about, maybe they talk about profit or bottom line or operating margin or net profit. And for those who are in finance, the difference between all of these different phrases is intuitive. For those of us who maybe didn't grow up in finance, it is not always as obvious. And what we often find is that people are using these phrases interchangeably when in fact, there are distinct differences. On today's episode, we want to dive into EBITDA specifically, because it is such an important measure in talking about companies and particularly when we start to think about transactions and valuation. So we want to understand what is EBITDA? Put it in context of some of these other metrics, and then be able to talk about some of the different ways that EBITDA is used. So with that Mark, as the person who does have the finance background, and for whom this is generally intuitive. Let's start with what exactly is EBITDA?
Mark Gaffin:So I think, maybe we'll start even just looking at the P&L just to orient ourselves there, and then move to EBITDA, because EBITDA is not a GAAP term, that's a general-
Stephanie Chambliss Gaffin:Generally accepted accounting principles.
Mark Gaffin:Exactly.
Stephanie Chambliss Gaffin:I love it, for those keeping score at home that score one for Stephanie.
Mark Gaffin:It's Friday. So anyways, EBITDA is not a GAAP term, but let's go back to the financial state for just a second, you know, you go from revenue, you go down to, through all the direct costs that actually, regrettably be used a manufacturing firm. All the direct labor, direct materials in some overhead allocations, it gets you to a gross profit. And I think most people are familiar with that term. And that's really important when you think about understanding the operating of the business. So, as a customer, if you will, of that data, that's still very, very important to me. And then you have all the SG&A that comes out of the firm, and there's different people treat this differently. Some people have interest in here, some people have depreciation in here, but all this selling general and administrative expenses flow out of that, and then it gets you to operating profit. So that kind of gets you to how are we doing after, are we paying all of our bills? So if you have operating profit, depending on whether there are a certain line items taken out of there. Operating profit could be very, very close approximation to EBITDA. Operating profit, then if you take depreciation amortization, which are non cash charges, and you take taxes, and you take interest expense out of there, and then you get down to, and there's probably some other income items, but that gets you principally down to net income. What we are trying to do with EBITDA in the finance world, right, we're trying to find a shortcut that gets us to a concept, really which is operating free cash flow to the firm. That's the important part. We'll talk about that in valuation. But that's really important to us is what is the earnings power of this company? How much cash can it earn, to pay bills, to pay capital providers? So whether that's debt or equity capital providers. So EBITDA is, as we said, not a GAAP term, but it approximates operating profit adjusted for things like if interest and depreciation and amortization were taken out before you got to the operating profit, then we adjust to make sure that's added back.
Stephanie Chambliss Gaffin:And we're adding those things back because those are non cash items, right?
Mark Gaffin:Depreciation, amortization, certainly are. Taxes would be cash. There probably would be two components to the cash, there would be a cash component at the tax expense and then there will be a non cash component. And that has to do with differences in your depreciation, this gets technical between book and tax balances. And then interest is almost certainly 90% cash item. There may be some fees and things like that, that are amortized into that. But yeah, so depreciation, amortization are non-cash, but taxes and interest would be cash. But what we're trying to do is get to what's the cash flow, before we take into consideration, any of the financing of the firm. So how you finance the firm has a lot of impact on whether or not you have interest expense, and what the tax consequences are because there would be a tax shield to the interest expense.
Stephanie Chambliss Gaffin:So if you will, that's a way that I guess, I would use the phrase maybe that we're normalizing so that the EBITDA, between if I'm trying to compare EBITDA, I have two different companies, than they should be more comparable, because we've taken out the impact of different sorts of financing structures. And we've also taken out the impact of taxation. If, for example, one company is located in a state with higher taxes than another.
Mark Gaffin:Yes, I think that's a fair representation. I think, what happens is because EBITDA is relatively easy to calculate from the P&L, and that may be what you have from a teaser, or it's in the teaser, you know, a one page marketing memorandum. People start to start there. At the end of the day finance folks really don't, we don't buy companies out of just EBITDA, we have a big model that goes through all the different uses and sources of cash to get to what is free cash flow to the firm. That's actually what we are trying to get to because that is ultimately what will trigger how much can I buy this company for? Or how much can I safely invest in this company? Coming back though, you will see things like loan covenants that will be based on EBITDA or, and I'm sure we're gonna talk about this, adjusted EBITDA which is actually even more interesting.
Stephanie Chambliss Gaffin:Yes, we'll certainly get to adjusted EBITDA a little bit later in the episode. But I want to come back to something you were just talking about, to say that EBITDA is ultimately not what the finance folks will use. I think you started to touch on this, but then, why do we all use EBITDA? Why is it so common?
Mark Gaffin:I think like anything else, it's a shortcut, right? I think if you go back to our, we always use a housing analysis, you know, what is the cost per square foot? Right, but two houses can be significantly different. And so their cost per square foot, or the price per square foot could be very, very different. I think the EBITDA you know, EBITDA, than an EBITDA margin gives you an idea, right? You're like, "Look, plus minus, when it all shakes out, you're paying eight to nine times EBITDA in that in that world." But no, one's just gonna say, just tell me what your EBITDA is, and I'll sign off on it at times nine, that's what I'll pay for it. You actually have to go in and find out what is the amount that has to be invested in capital expenditures, how much has to be invested in working capital as you grow? Those are all those elements that will come into play, when you continually figure out what free cash flow to the firm is. That's the number that I use when I'm trying to discount to get to like a DCF analysis.
Stephanie Chambliss Gaffin:Right? So exactly what I was thinking. So discounted cash flow, or DCF analysis is one of the methodologies that's commonly used in valuation. And again, we'll have a whole episode talking about valuation. But that would make sense then, if EBITDA is a shortcut that gets us to something approximating free cash flow and ultimately, we want to be able to do the valuation on a multiple of free cash flow, or just kind of cash flow analysis, than EBITDA sounds like it's easier to get to, there's at least, if not GAAP principles, relatively accepted ways to get there. So that everybody has a shorthand to be able to say, "Alright, about what would this company have on a cash flow basis?" And then be able to translate that to valuation.
Mark Gaffin:Yeah, and I think we'll cover this, I think more technically, when we get to the valuation arc, but two other areas of how you value a company's relative valuation, technology techniques, and one would be looking at public comps. So if you're looking at certain company, you could go look at other companies that are trading in the public market, you can get on wallstreetjournal.com, cap IQ, any number of different platforms to figure out how are they trading? You can get to EBITDA, people report that there, how are they trading? What's their enterprise value to EBITDA? It will give you some guidance to what you might want to pay for that specific asset. You know, it's not gonna be directly comparable, but it gives you some idea. And then if you look at other deals that have gotten done in the world, if you're a private equity firm that's done some, or if you look on a Pitch Book or something like that, that covers middle market deals-
Stephanie Chambliss Gaffin:Pitch Book for those who may not be familiar with it, is a great data source for transaction information.
Mark Gaffin:Right, as in GF data and Capital IQ, a number of these in Pitch Book is one that we're we're very fond of here. You go out and look at other people that have done deals, and you can sometimes back into or sometimes explicitly, we'll see the times EBITDA, what you don't know, again, not to keep teasing, adjusted EBITDA, that's actually the part that got done, because there may be add ons. So if I'm looking at my adjusted EBITDA and comparing it to the EBITDA that's posted in the Wall Street Journal, there's probably some differences in how those two were constructed. So it's good guidance. And that's why I use ranges all the time when I'm doing enterprise value. I don't do a decimal point precision, because you can't consider all the differences between those two.
Stephanie Chambliss Gaffin:Okay, fine. You keep teasing about adjusted EBITDA, so let's go there next. When we talk about adjusted EBITDA, so I think it would make sense to first talk about, what- before we get to what exactly is adjusted EBITDA and how do we do it, let's start with why? And I'm guessing people have heard the phrase have an adjusted EBITDA, but why do we want to do adjustments to EBITDA?
Mark Gaffin:So really, there's, in any given company, certainly companies in the lower end of the middle market, maybe what we call first time institutional money into a company, they've run it their way, which is fine, right? But there may be a number of different things, expenses, there may be certain special idiosyncratic treatment of things in their P&L, and what you're trying to do is adjust for one time, or different variances for market so that you actually get to- if I bought the company and had it tomorrow, what would he about EBITDA truly be?
Stephanie Chambliss Gaffin:So alright, so that's helpful. And I want to remember to go back to how we talked about adjusting EBITDA after a transaction as well. But right now, let's just stay on the, if you will, the sell side or, or for an ongoing concern. So EBITDA is, again taking out some of those things that are atypical or abnormal expenses, right?
Mark Gaffin:Yes, yeah, I don't want to make it sound like it's a bad thing. But the abnormal meaning, it's not typical in the industry, it may be specific to that company that we're just going to add back. And let me give you a real quick example. If I were the CEO, or you were the CEO of the company, you might pay yourself $1 a year. But if I'm buying the company, I'm going to have to hire a manager, and you're going to take off to the Bahamas with all your money, I'm gonna have to pay somebody more than $1 a year to take over your job, right? I would have to pay them, call it$250,000, $300,000 a year. Conversely, so I'd have to adjust EBITDA right? Because really, it's not that. Or you were paying yourself $2 million a year. And that's great. But when I hire somebody, I'm not going to pay them 2 million, I'm going to pay them the $300,000. So I would add that back to the earnings, because specifically around that particular expense. I want to normalize, if you will, for what the cost should truly be.
Stephanie Chambliss Gaffin:So this is giving a sense, a better sense, we're making adjustments to basically say, what would we reasonably expect the EBITDA to look like on an ongoing, going forward basis?
Mark Gaffin:That's right. And this goes, you know, there's a lot of, I think, well trod, highly accepted add backs. So let's think, take that one step further, if you own the building, which we operated in, and we paid you rent, again, same thing, that could be way above market, or way below market. And if someone else is going to buy your company, they want to have a lease, that's probably market facing, you know, what's the market value of the lease, so we can get a long term. So I could adjust the EBITDA for that, either higher up or down. These all can be very good things, right? There's nothing wrong with this, where this can get a little crazy, if people started adding back a whole bunch of really wild stuff. And if an advisor ever wants to do that, that can be a problem because this is not going to be defensible when you go out. I know you had an interview with Cheryl.
Stephanie Chambliss Gaffin:Cheryl Aschenbrener of Sikich. Yep.
Mark Gaffin:And they come into what's called equality of earnings. They will come in and do a sell side or a buy side quality of earnings. And they'll look at all that and say, how do they make their money and part of that effort, will be looking at if there's proposed add backs, how defensible those are or aren't.
Stephanie Chambliss Gaffin:One of the questions that we often get when people start to get into a transaction and understand that, you know, Mark, as you've often said, selling your business or a transaction, whether you're selling your business or raising capital isn't cheap to do. And so when we come back from the break, let's talk about how transaction expenses are treated relative to EBITDA. Right in the Middle Market is brought to you by SLS Capital Advisors. SLS Capital Advisors is a boutique financial advisory firm working directly with middle market leadership to tackle critical growth opportunities, including exits mergers and acquisitions and access to capital. The principles of SLS Capital Advisors bring deep industry financial and consulting experience to firms seeking tailored strategic opportunities, including capital for major growth initiatives and alternatives for those evaluating corporate transitions and exits. SLS Capital Advisors services include managing effective exits and sales processes, involving sophisticated buyers, such as strategic purchasers, financial buyers and operator to operator transactions, and raising capital to fund our clients growth, including debt and equity elements. They also assist companies and capture growth opportunities through focused and effective organic growth and M&A programs and unlocking profit potential through business portfolio rationalization and divestiture. SLS Capital Advisors, focused on delivering consultative executions for clients seeking strategic growth in capital. Find us at SLScapitaladvisors.com to learn more about how we can help you. Welcome back, I'm here with my co host, Mark Gaffin. And today, we're talking about EBITDA. So, just before the break, we were talking a little bit about add-backs and adjusted EBITDA. Specifically, one of the questions that often comes up is around transaction costs. So that's another cost that typically would be added back to an EBITDA as an adjustment to get to adjusted EBITDA, right?
Mark Gaffin:Yes, and I would put that in a larger family of specific, one time, if you will, highly identified and discrete costs. And look at that might have been a year ago, you had a very rare lawsuit, someone slipped and fell in your store, and you settled it for $10,000, right? We don't expect that to recur, it was relatively extraordinary to us. So we would try to add that back and say that $10,000- we don't expect that to happen all the time. And there may be other things like that, if you moved stores or moved locations and you spent$75,000 in moving locations. That's not going to happen every year. So we want to add that back. And again, to your point, if you're doing a transaction, and you get 3 to 5 to 6% of fees, you know, it's accountants, its advisors, its lawyers, you say, okay, that is not going to be an ongoing expense, we can add that back to the EBITDA.
Stephanie Chambliss Gaffin:And sometimes there are extraordinary expenses to the upside as well. I'm sorry, not expenses, but could be extraordinary revenue items as well. Right? If I think about, now typically, it would be, if you will, the buyer that's going to come back and argue "No, that really was extraordinary and should be taken out." Probably not going to be the seller. Although, often the seller also, again, they want to put forth something that is optimistic, but realistic, so that you're not getting down, deep into negotiations and then discover that something is completely different than what was represented. But I can imagine where you also might have something to the upside. And actually, isn't there a question about very related to that, about how companies are treating PPP money this year?
Mark Gaffin:Yeah, I think that's interesting, because I think that the jury's a little bit out, there's a lot of mixed signals and I don't pretend to be a CPA accountant. I know how I, as a finance person would treat PPP, but actually how it flows through the P&L and then ultimately, how it's taken care of within a transaction itself are very, very different. So yeah, I think that's a very specialized topic. And we should cover it I think we should have a accountant on here, we could bounce some ideas off of because we are seeing some emerging guidance from the Small Business Association Administration and how to handle PPP. But no, you're right. And look, there are some extraordinary revenue, I'm not as quick to discount those. Because my point would be well we are always opportunistically looking for deals. So I don't, I wouldn't try not to if that may catches on, you have the discussion, but you know, I'm not one to lower EBITDA on a client unless there's a good reason to.
Stephanie Chambliss Gaffin:Fair enough. Fair enough. We've talked about so far, what is the EBITDA? How does that measure fit in the context of some of the other measures that we talk about, free cash flow, the different kinds of profit. We've talked about why we use the EBITDA, and what adjusted EBITDA is and how you make some of those adjustments. What some of those common adjustments are. Before we wrap up today, I want to talk a little bit about how a potential buyer would be looking at EBITDA. So we talked about this briefly, in considering why buyers like EBITDA. Because they're looking at a number of different perspective deals, they need a way to weed through them quickly. And so again, if it becomes that shortcut to be able to say, you know, this is at my threshold, or you know, it's large enough for me to be interested in or too large for me to be interested in. But when we get past that first screen, how is a buyer looking at EBITDA?
Mark Gaffin:Well, I think that's right, people have to draw a line somewhere because EBITDA has got a currency, you know, it gives you a good idea of what a company is. If someone says, I've got a SaSS company with EBITDA of $3 million. In my head, I'm already calculating, okay, what do I think the growth rate is there? What do I think the margins are there? Because I would know from doing SaSS companies, right? And so I'm like, "Okay, based on what you're telling me, these are kind of the trading multiples that we've seen in that world." But if I came in, and your growth was very, very different, high or low, then I would adjust that, right? So I wouldn't just trade off the EBITDA. Because there's an implicit growth multiple in the EBITDA multiple of a transaction. Right? If it's low, if you've got a wonderful solid value added manufacturer in the middle market with an EBITDA of $1 million, they're not going to trade at the same multiple as a SaaS company with the same EBITDA number. Okay. So if you're at the country club, and you hear somebody saying, I sold my company at 14 times EBITDA. That's terrific if my company's exactly like theirs. If it's not, then I can take that as interesting, but I've got to make adjustments for what my company actually does. And we do that when we're putting together marketing materials for a sell side engagement. We're always trying to make sure that our company has a good story, your point on the right story, that story shows why this is their solid EBITDA, you know, it's defensible. Best number you can get for us, and then why it should trade at the higher end of the range for a company like that.
Stephanie Chambliss Gaffin:Yeah, going back to your earlier point about, what's sometimes called the Country Club Multiple, right? It's somebody's out, they hear from friends or others that they know, others in their circle, that somebody sold their company for 14 times EBITDA for some wonderful multiple. And, again, I think from the buyer perspective, I always think about it is, what the buyer is going to come back and look at and quite frankly needs to do, is they need to both push on, what is that EBITDA number? So if the company says that their EBITDA is 5 million, and really when you look at it, yeah, they maybe were a little bit too aggressive with the adjustments or you know, for whatever reason, I, as a buyer, look at that and say, I really only believe that the EBITDA is 4 million, right? So negotiating what that EBITDA is, is one critical piece. The second piece, then, is being able to talk about what multiple is appropriate. And as you say, both of these are shortcuts. Ultimately, though, it is how do we get to something that we can look at comps in the market, that we can understand, what is the valuation that's being proposed, or the price that's being proposed, relative to what others are seeing out in the market.
Mark Gaffin:Right. And I think that this is kind of a funny little technique that I learned in business school and then in my first couple years out, in strategy consulting, there are people that want EBITDA multiple, they love it, it's easy for them to think about, they don't want to see this huge model that you're using on a DCF and then there's valuation ranges that you do. So what you can do is say, Well, if EBITDA is $10 million dollars, I'm going to do this huge model and come up with what we would pay for the company, whether that's an LBO model or DCF model or Monte Carlo Simulation, any number of things that you could use. But we're gonna go pay 100 million dollars for this company, they need to come back and say, "Well, it's a 10 multiple." So everybody's quite happy, but you kind of know how you got to the hundred million. And you just divide by the EBITDA so now you've got your multiple. But look to your point, this is important because EBITDA is used in transactions. I'm not saying it's a bad number, but it's used for EBITDA or earnouts. Some are earnouts on revenue, some earnouts are EBITDA based and so, it is a non trivial exercise. Once you start to close a transaction, you have to LOI and you're documenting it to figure, what goes into EBITDA, what are the adjustments that go into EBITDA. So if adjusted EBITDA is a million dollars this year, you've got to drive this to $1.2 million next year on these same adjustments to get your earnout you're going to care how we calculated EBITDA.
Stephanie Chambliss Gaffin:Well, this is something that we often work with our clients and potential buyers on, is how did we adjust EBITDA that we're using to calculate the price. But also, to your point, if there's an earnout, which very often there is an a transaction structure, how are we agreeing ahead of time, right? Because the last thing you want to do is be sitting there at the time of that earnout and now be arguing about how we're going to calculate EBITDA. So I can think of a couple of instances recently, where we knew that the buyer was going to make investments, we knew that they had other related companies, potentially they had a holding company that was going to have overhead that they might want to allocate to the operating company. All of those things are fine, right? We know that they're buying it because they want to make investments to be able to grow. And that's great. However, how do we treat that and how do we look at that in a way that's fair to both sides, as we think about looking at that EBITDA at the end of year one and the end of year two, to determine the earnout that is do the original seller.
Mark Gaffin:I think like with any other financial measure, if it's open to being manipulated too much, then you really don't win. It can be used against you. I think a real quick story in the leverage lending world. There was concern back in 2013 and 14 about over-levered deals. People were doing deals that were north of six times EBITDA-
Stephanie Chambliss Gaffin:And over levered means?
Mark Gaffin:Too much debt. So the government, the regulator started getting all up in arms about that. And people said, Well, if six times EBITDA is your problem, and they were using adjusted EBITDA, then they'll just allow more add backs in and then magically, all the sudden the deals were all right at six times, EBITDA, the upper end deals. Doesn't mean the banks weren't doing their normal work, to do all of what we're talking about, which is cash flow from operations, cash paying taxes, cash available after paying for capital expenditures, you know, that's what they care about. They care about cash that's available to pay them after operating the company. But they're like, Look, if there's a problem with, you know, we'll just use adjusted EBITDA. And that's what people are doing, adding all kinds of things into EBITDA to get the debt multiple down. Not useful.
Stephanie Chambliss Gaffin:The other interesting thing right now is obviously given that EBITDA is, you're starting with revenue, at the top line and so one of the questions right now is also, how are buyers and investors looking at 2020 revenue, and foreshadowing Cheryl Aschenbrener of Sikich, who we've already talked about on this episode, is actually going to come back and join us in another couple of weeks. I know, excited to have her back. And we're going to talk about exactly that. I mean, we've seen everything from potential buyers saying, look, we know that 2020 has been a crazy year. So let's just use 2019 to trying to figure out how we treat it in add-backs. So looking forward to a really robust discussion with Cheryl about what are the different ways we can think about perhaps a typical revenue in 2020? And how is that being treated in transactions?
Mark Gaffin:Yeah, and I think there's ,I want to give you my view, this is Mark's view, this is not anybody's view. This is not necessarily correct. I've seen the mugs out there, EBITDAC, so now we're going to have COVID, you know, "C" on there.
Stephanie Chambliss Gaffin:EBITDAC, for those who might have missed the episode with Cheryl is adding Coronavirus to the very end. So earnings before interest, taxes, depreciation, amortization and COVID.
Mark Gaffin:So I think that if I looked through somebody's financial performance, and they were, again, very specific things that they needed to do with the response to COVID, lets just be extreme, put Plexiglas up in front of all their tellers or whatnot, right? That's not anything we're gonna have to do again, and hit the P&L with an expense item. That I can see saying, add that back, because it's a very discreet, not typical operating expense. But some of the things like lostrevenue or compressed margins, I want to be very careful with that. Because to me, that is yes, it was a shock to the entire system. But I think that I would want to know as an ambassador, how did that company handle, how robust was the cash flow to external shocks like that, because, look if I'm buying a company, I'm buying it with a very long time horizon, probably if even a financial investor, it's five to seven years. So there's probably going to be something else out there, whether it's a recession, geopolitical disruption or something. So I would want to not just dig it for that but I'd want to be really thoughtful about how resilient was the supply chain? How resilient was my clients, my customers, or could they just shut me down and I lost 80% of my revenue in two weeks?
Stephanie Chambliss Gaffin:Right. And that is, you know, I think we've talked before about in 202o, one of the ways that we're seeing people address this is looking at, what was the strength of the company before the shutdown? What happened during you know, I would say, obviously, we're still in the Coronavirus, time, but during the worst of the shutdown, and now, what does the bounce look like? So if it was a hard shut down, but there's been a strong bounce, that's one profile. If it's, you know, been a different profile of maybe a slow decline or a slow increase, or a rapid increase. But again, if we go back to the general principle of how do we adjust EBITDA to be able to look at what is a reasonable expectation of the EBITDA going forward? To me, that's how you look at what's happened in 2020.
Mark Gaffin:That's right. And I think you have to look at in the context of what happened, right? We just got the new GDP numbers out for the third quarter, you know, up 33%, and you look at the second quarter, they were down whatever, 35, 36% on an annualized basis. So I can't look at what happened to this little company without taking that into consideration. Did it bounce? What is required and how quickly they get back on track? So again, that goes to, it's going to be very difficult to just use EBITDA a trailing 12 month EBITDA on October 31, tomorrow, and just say, there, there's my EBITDA, right? So it's a great shortcut. It really is. It's going to be adjusted when we do things in the finance world. But also, it can be useful.
Stephanie Chambliss Gaffin:I think that's a great summary. And so with that, I'm Stephanie Chambliss. Gaffin. And you've been listening to Right in the Middle Market, a podcast about running, growing and selling your middle market business. We'd love to hear your comments about today's episode and whether this helped you get a better understanding of EBITDA and tell us what ideas you'd like to hear about most in the future. Send me a message on LinkedIn or drop me a line at podcast@gaffingroup.com. And be sure to subscribe to hear more pragmatic tips from upcoming episodes. Until next time, be well and be deliberate.