If you own or run a middle market company and you do not know your EBITDA by business unit, you are flying blind. Period.
What EBITDA Means
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is the closest proxy for the operating cash flow your business generates. And it is the number that determines your enterprise value.
When a PE firm or strategic buyer values your company, they multiply EBITDA by a factor. That factor, your multiple, depends on growth, risk, market position, and management quality. But the base number is EBITDA.
Why Revenue Is Not Enough
Revenue is vanity. I have seen $100 million revenue companies with worse EBITDA than $30 million companies. The difference is margin discipline.
If you are growing revenue but EBITDA is flat or declining, you are adding complexity without adding value. That is a treadmill, not a growth strategy.
How to Improve It
Three levers. Pricing: most middle market companies underprice. A 2% price increase with zero volume loss drops straight to the bottom line. Mix: shift resources toward your highest-margin products and customers using 80/20 analysis. Cost structure: eliminate complexity that does not generate proportional margin.
The 30% Target
The Profitable Growth Accelerator targets a 30% EBITDA improvement in 100 days. That is not a fantasy number. It is the compound result of pricing discipline, product rationalization, customer focus, and structural alignment.
Companies I have led have consistently hit or exceeded this target by running the 80/20 playbook with discipline. The math works when you stop subsidizing the 80% that is not earning its keep.
Book a strategy call at the8020institute.com to find the right program for your company.