In short, it depends.
The diligence side of our practice has been effective in analyzing, and in many cases isolating, the impact of COVID-19 and related federal, state and local executive orders on historical earnings, honing in on normalized run-rate performance results of a target business for our clients.
Many businesses have experienced temporarily deferred or reduced sales. Others have seen temporary spikes.
Many businesses have also seen temporary cost structural changes as a result of COVID-19. The extent to which these interruptions are truly temporary versus more permanent top-line or cost structural shifts is the important question to answer. Within many industries we either already have or are beginning to see a return to normalized levels.
Within other industries, however, businesses are going to see a permanent change in customer mix, supplier mix and/or other structural components. In these cases historical adjusted EBITDA is going to be frankly less relevant in determining the value of the business as historical results will be less predictive of future cash flows.