Finance
Phantom EBITDA
Also known as: Head number, assumed EBITDA, unverified EBITDA
The EBITDA number the founder carries in their head — built on undocumented add-backs, optimistic normalizations, and personal expenses the buyer's QoE firm will reject.
WHY IT MATTERS
Phantom EBITDA is the number that feels real because the founder has repeated it to themselves for years. It includes every adjustment the founder believes should count: the gap between their salary and a market-rate replacement, the spouse's compensation for a role with no job description, the personal vehicle, the club dues. None of these are fabricated. Most are reasonable in concept. The problem is documentation. A QoE firm doesn't accept adjustments because they make sense — it accepts them because they can be verified. An owner compensation add-back without a comp study gets partial credit at best. A spouse's salary with no documented responsibilities gets struck entirely and replaced with the cost of hiring someone to do whatever the spouse actually did. Each gap between what the founder believes and what the QoE firm can verify is a dollar of phantom EBITDA — and every dollar gets multiplied by the deal multiple on its way to the purchase price.