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The multiple never applies to reported EBITDA. Nine adjustments on a worked example, the value gap they create, the evidence a buyer will require, and the four adjustments it will refuse.
25 September 2026 · 7 min read · By MGI BFC
In a sale negotiation everyone argues about the multiple. That is the wrong order: the multiple applies to a base, and that base is almost never the EBITDA reported in the accounts. It is rebuilt, adjustment by adjustment, and that is where most of the value is decided.
Take a worked example. All amounts are in thousands of Tunisian dinars (TND '000). A distribution business turns over 12,400 and reports EBITDA of 1,190.
| Adjustment | Direction | Amount, TND '000 |
|---|---|---|
| Owner's remuneration: 420 paid, 180 market level for the role performed | + | 240 |
| Rent paid to a company controlled by the seller: 216 paid, 144 market rental value | + | 72 |
| Legal fees on a settled dispute, non-recurring | + | 65 |
| Insurance proceeds received after a loss event, non-recurring | - | 90 |
| Personal expenses borne by the company, car and travel | + | 38 |
| Services invoiced by a related party: 130 invoiced, 90 at market price | + | 40 |
| Full-year effect of a customer contract signed in September | + | 85 |
| Full-year effect of a customer lost in November | - | 120 |
| Alignment of the bad debt provisioning policy | - | 45 |
| Total adjustments | + | 285 |
Adjusted EBITDA is therefore 1,475 against 1,190 reported, in TND '000.
Apply a multiple of 6.0x, the top of the 4.0x to 6.0x range our index publishes for distribution and retail.
A gap of 1,710, for a few days of work on documents the company already holds. Net debt and working capital being unchanged, that gap flows straight through to the equity price. It cuts both ways: a seller who has not prepared this schedule lets the buyer build it, and a buyer builds the adjustments that lower the base first.
The rule to remember: every dinar of adjustment is paid at the multiple. On a multiple of 6, one hundred thousand dinars argued is worth six hundred thousand of price. No other line in the negotiation carries that leverage.
Full-year effects, lines 7 and 8, are where the hardest discussion happens. The seller wants to annualise the contract won, the buyer wants to annualise the customer lost. The only defensible way through is symmetry: if gains are annualised, losses are annualised too, and both are documented with contracts and invoiced volumes since the effective date.
Accounting policy alignment, line 9, is the adjustment sellers never mention because it is negative. Raising it yourself has the opposite effect to the one feared: it makes the whole schedule credible. A schedule in which every single line favours the seller does not read as analysis; it reads as advocacy.
An adjustment is not asserted, it is demonstrated. For each line the buyer will ask for support:
The adjustment schedule, supported by its evidence, is the first document we produce on a sale readiness engagement. It then becomes the backbone of due diligence: every buyer question finds its answer in a line already evidenced, which shortens the exchanges and protects the timetable.
Behind the word adjustment lies a single question: what will this business earn next year, under normally paid management, in premises rented at market price, without this year's accidents? That is the definition of sustainable earnings. Any adjustment that answers it will be accepted; any adjustment that dodges it will be rejected, and will cast doubt on the others.
MGI BFC prepares the adjustment schedule and its supporting evidence, then supports sellers and buyers through due diligence. See our transaction advisory services, our article on purchase price adjustments and our index of sector valuation multiples.
General information prepared by the Transaction Advisory Services team at MGI BFC. Figures in the example are illustrative. This text describes market practice and is not advice.