If you’ve owned your practice for a while now, you might have heard either an M&A broker or a buyer directly reach out & talk to you about your “EBITDA”. Your first thought might be, what does that even mean? I know my profit when I look at my P&L, but what does this random, 6-letter word mean? We get it, it can be a little confusing, and certainly not intuitive, so let’s break it down.

Understanding EBITDA

E - Earnings

B - Before

I - Interest

T - Taxes

D - Depreciation

A- Amortization

Now that we know what each letter stands for, you might be wondering: “Why does it matter to understand my earnings before these four things?”

Great question! Interest, Taxes, Depreciation, and Amortization are all expenses that reduce your taxable income (shown on your Balance Sheet), but they vary widely from one practice to another due to different financing and tax strategies. Since these costs don’t directly reflect how the business is actually performing, we exclude them when calculating your “operational earnings.” This allows for a more apples-to-apples comparison across practices. In benchmarking, these four items are treated as “add-backs” to better assess the true earning power of your business.

How to achieve a higher EBITDA

So how do you increase the value of your practice? There are two main recommendations we have to help improve your EBITDA; increase your revenue, and be mindful of spending (specifically overspending on consumables).

1) Increasing Revenue

○ Assess revenue/hr seeing patients

○ Focus on same-day rebooking

○ Comprehensive

2) Being Mindful of Overspending

○ Create a budget for your supplies cost

○ Plan out how long consumables will last to avoid spoilage

○ Make sure there is only one person doing the ordering

Take-Away

To put it simply, EBITDA will tell you the profit of your practice from your operations only. If you want more information on how to calculate or increase your EBITDA, email us at

info@mavenfp.com.