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EBITDA - A Measure of Perfomance (A Non-GAAP Number)

Dan Polsky, a bankruptcy and restructuring professional with 40 years of experience, discussed EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) in the context of the American Bankruptcy Institute's Master Class series. He explained EBITDA's origins, uses, and potential pitfalls, emphasizing its non-GAAP status and the need for adjustments like interest, tax, and depreciation add-backs. Polsky highlighted EBITDA's role in lending decisions, covenant design, and enterprise valuation, using examples like RJR Nabisco and WeWork to illustrate its misuse. He also stressed the importance of understanding EBITDA in conjunction with free cash flow to assess a company's true financial health.

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EBITDA, financial metrics, bankruptcy, restructuring, corporate distress, insolvency litigation, leverage buyouts, interest coverage ratio, adjusted EBITDA, free cash flow, enterprise valuation, financial statements, GAAP, IFRS, financial risk.

Daniel Polsky is a managing director with Getzler Henrich, a Hilco Global Company in New York and has more than 30 years of diversified restructuring experience, serving in advisory, expert and crisis/turnaround management roles. He has led many engagements in formal bankruptcy proceedings and out-of-court restructurings, and has advised unsecured creditors’ committees, senior management of distressed businesses, bank lenders, private-equity investors and other parties-in-interest. Mr. Polsky has assisted clients in a wide variety of industries, including health care, retail, telecommunications, steel, transportation, professional services, manufacturing and distribution, among others. He has advised investors considering potential business/asset acquisitions and distressed businesses on disposition alternatives. A longtime creditors’ rights practitioner, Mr. Polsky’s experience includes devising case recovery and litigation strategies, developing plans of reorganization and capital structures, designing operational and strategic plans, and creating and implementing cost-reduction strategies. He has conducted various fraud and financial investigations, performed insolvency and liquidation analyses, prepared expert reports, and provided expert testimony in connection with numerous bankruptcy litigation and restructuring matters. Over the course of his restructuring career, Mr. Polsky has also provided quality and risk-management oversight, including conflict-resolution and risk-mitigation, engagement acceptance and documentation, service-line policy development, and complex client and technical matters. Prior to joining Getzler Henrich, Mr. Polsky served in a senior leadership role at a prominent global consulting firm. A member of ABI and the Turnaround Management Association, he received his Bachelor’s degree from the University of Pennsylvania and his M.B.A. from New York University.

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