---
id: "prereq-ebitda"
type: "prereq"
source_timestamps: ["§ When Short-Term Pragmatism Is Strategic"]
tags: ["finance", "private-equity"]
related: ["concept-strategic-sales-debt"]
reason: "Necessary to understand the financial metrics driving private equity short-term strategic mandates."
sources: ["commercial"]
sourceVaultSlug: "hbr-seg-commercial"
originDay: 5
articleStem: "hbr-tier1-03-sales-debt-grow"
sourceUrl: "https://hbr.org/2026/01/the-risks-of-prioritizing-short-term-revenue-over-customer-fit"
sourceTitle: "The Risks of Prioritizing Short-Term Revenue Over Customer Fit"
---
# EBITDA

**Prerequisite.** **EBITDA** = Earnings Before Interest, Taxes, Depreciation, and Amortization.

The source describes a **private-equity firm incentivizing a company to grow revenue and EBITDA within an 18-month window** — one of the four conditions under which [[concept-strategic-sales-debt|strategic sales debt]] is justified ("When Short-Term Pragmatism Is Strategic"). Understanding EBITDA is necessary to see *why* a PE firm would mandate such a compressed short-term financial focus, and why a company might rationally take on poor-fit revenue to hit it.

> **Reason:** Necessary to understand the financial metrics driving private-equity short-term strategic mandates.