Normalize EBITDA
Reported EBITDA is 64 after a one-time cash litigation expense 9. Normalize EBITDA and calculate implied EV at 8x.
Worked answer
ev: (64 + 9) × 8 = 584
Add back a genuinely nonrecurring EBITDA expense.
Apply the multiple consistently to the normalized metric.
Technical follow-ups
What evidence would you need before accepting management’s recurring restructuring addback?
How would your recommendation change if the same supposedly one-off expense appeared in each of the last three years?
Follow-up answer guide
Review recurrence, cash evidence, historical addbacks and business economics; repeated ordinary restructuring may be recurring even if management calls it one-time. Consistency across comparables matters.
A fresh retry
Reported EBITDA is 78, after an included genuinely one-time litigation expense of 6. Calculate normalized EBITDA and implied EV at 7.5×.
Inspect replacement inputs
expense: 6
multiple: 7.5
Check the retry bridge
ev: (78 + 6) × 7.5 = 630
Original fictional example. Not a report of a specific firm’s interview. Explanations need qualified human review.