EBITDA is the most comfortable number in corporate finance.
It looks clean.
It looks strong.
It looks scalable.
It also hides reality.
Because EBITDA does not pay interest.
Cash does.
EBITDA does not repay principal.
Cash does.
EBITDA does not survive refinancing.
Cash does.
In volatile markets, EBITDA becomes what it often was all along:
A comfort metric.
Adjusted Reality
“Adjusted EBITDA” is where truth starts to bend.
Adjusted for one-offs.
Adjusted for restructuring.
Adjusted for synergies.
Adjusted for optimism.
Every adjustment makes the number cleaner.
And further away from liquidity.
For years, markets tolerated this.
Cheap capital rewarded expansion over conversion.
As long as liquidity flowed, the illusion held.
That illusion is gone.
Profitability Is Not Solvency
A company can report positive EBITDA and still:
- burn cash
- increase leverage
- depend on refinancing
- erode equity
This is not theoretical.
It is common.
If operating profit does not translate into free cash flow, the model is fragile.
It depends on external tolerance.
And tolerance is cyclical.
Statement from Stefanie Laura Wurzer
Stefanie Laura Wurzer, Managing Director and COO of BlackSwan Capital, is clear:
“EBITDA can create a false sense of security. We regularly see businesses that look profitable on paper but lack real liquidity strength. In negotiations, cash flow determines leverage — not accounting metrics.”
Negotiating power is liquidity.
Not presentation.
Debt Does Not Care About EBITDA
Banks do not get repaid in EBITDA.
Private credit funds do not get repaid in adjusted margins.
Interest coverage based on projections is not resilience.
It is assumption.
When markets tighten, assumptions get repriced.
Cash gaps get exposed.
Covenants get tested.
Refinancing gets expensive.
EBITDA does not defend you.
Cash does.
Statement from Mats Lundin
Mats Lundin, Executive Director Nordics and Associated Partner at BlackSwan Capital, observes:
“In the Nordics, investors are increasingly discounting EBITDA-based narratives. Free cash flow and balance sheet durability are driving valuations. Companies that cannot convert earnings into liquidity are facing structural repricing.”
The market has shifted.
And it is not subtle.
The Discipline Reset
We are in a discipline reset.
Investors now prioritise:
- cash conversion
- working capital control
- capital expenditure discipline
- deleveraging capacity
Not slide decks.
Not forward-adjusted multiples.
Not optimistic scenarios.
Cash.
The BlackSwan View
EBITDA is a tool.
It is not truth.
Truth is liquidity under stress.
Strong companies:
- generate free cash flow
- build buffers early
- refinance proactively
- align growth with real liquidity
Weak companies optimise optics.
Strong companies optimise survival.
Conclusion
EBITDA can comfort management.
It can comfort boards.
It can comfort investors — temporarily.
Cash flow does not comfort.
It decides.
EBITDA is a comfort lie.
Cash flow is the only truth.
Where Capital is Critical, Execution Matters.
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