How it works in a data room
The work starts with the general ledger, monthly management accounts, payroll exports and bank statements, all of which the seller loads into a dedicated finance folder. The accounting firm then raises questions through the Q&A tool, asks for supporting schedules, and builds a bridge from reported EBITDA to an adjusted figure. Typical adjustments strip out one-time legal costs, owner salaries above market rate, unusual customer credits and revenue booked before it was earned. The finished report and its working files usually sit in a restricted folder that only the buyer and its lenders can open.
Why it matters in a deal
Most private company prices are set as a multiple of earnings, so every dollar the report removes from adjusted EBITDA can take several dollars off the offer. Lenders also lean on the number when they size acquisition debt. A seller who commissions its own report early, often as part of vendor due diligence, gets to argue about adjustments before bidders anchor on a lower figure. The analysis also shapes earn-out targets, since those are normally measured on the same adjusted basis. The private equity guide explains why sponsors rarely bid without one.
Example
A Midwest HVAC services business reports $6.2 million of EBITDA. The buyer’s accountants find $400,000 of revenue recognized on contracts not yet performed and $250,000 of the owner’s personal vehicle and travel costs run through the company. After netting the two, adjusted EBITDA lands near $6.05 million, and at a seven times multiple the headline price moves by roughly $1 million. Both sides track each adjustment as a numbered question so the reasoning survives into the purchase agreement.