Both strategic and financial buyers will attempt to reduce executive compensation to market levels by $80,000 ($700,000 − $620,000). They will also have to pay a higher lease rate of $90,000 ($390,000 − $300,000). So the adjustment for both buyers to generate normalized EBITDA is $4,500,000 + $80,000 − $90,000 = $4,490,000.
However, only a strategic buyer will be able to realize synergistic savings of $700,000 ($6,300,000 − $5,600,000). So normalized EBITDA for a strategic buyer is $5,190,000 and for a financial buyer it is $4,490,000.
