Now you EBITDA me, now you don't
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Companies are increasingly becoming the best magicians on the planet—and lenders are caught watching an illusion nobody’s talking about. 🔮
Our Q1 '25 data reveals a striking story:
- EBITDA add-backs were in 55% of deals in Q4 ‘24 (highest in two years)
- Then fell to 37% in Q1 ‘25 (an 18-point drop)
- Uncapped addbacks plunged even further, from 20% → 9%
Why does this matter? These terms let issuers count tomorrow's potential cost savings in today's EBITDA calculations. It's financial alchemy that can transform a tight leverage ratio into a compliant one with the wave of a wand. 🎩
Most fascinating? The sheer unpredictability. Over nine quarters, we've seen these terms range from 20% to 55% with no consistent pattern. One quarter's impossible ask becomes next quarter's market standard.
The message is clear: in capital markets, timing isn’t just important—it’s everything. With these terms directly impacting borrowing capacity headroom, catching the market at the right moment could mean millions in additional flexibility.
Download Noetica's complete for more.
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