Pro Forma Adjustment
A restatement of historical financials to reflect a specific event — such as an acquisition or disposal — as if it had occurred at the start of the period.
Also known as: Pro-forma, PF adjustment
One-line definition
Pro forma adjustments restate past results to give a like-for-like picture after a structural change to the business.
Typical triggers
- Bolt-on acquisitions during the period (annualise the acquired EBITDA).
- Disposals (remove the sold entity's P&L).
- New site openings (annualise partial-year contribution).
- Repriced contracts effective mid-year (annualise the new rate).
TS challenge
Buyers' TS teams critically assess every pro-forma claim. The burden of proof lies with the vendor — all adjustments must be supported by underlying data.
Related terms
Normalized EBITDA
EBITDA restated to remove one-off items and reflect a sustainable, run-rate level of profitability.
Quality of Earnings
The TS work-product that bridges reported EBITDA to a defensible run-rate figure a buyer can underwrite.
Carve-Out
A transaction where a division or business unit is separated from its parent company and sold or listed as a standalone entity.