LTM (Last Twelve Months)

In M&A transactions, LTM (also written as TTM — Trailing Twelve Months) is the standard period over which a target company’s financial performance is measured for valuation purposes. Rather than relying on the most recent completed fiscal year (which could be 6-11 months stale), LTM calculations roll the financial data forward to the most recent available month, giving buyers and sellers the most current view of the business’s performance.

How LTM Is Calculated

LTM is calculated by taking the most recent completed fiscal year and adjusting for the current period:

LTM = Last Full Fiscal Year + Year-to-Date Current Period − Year-to-Date Prior Period

For example, if a company has a December 31 fiscal year end and it is now October 2026:

• Last full fiscal year: January 2025 – December 2025
• Plus: January 2026 – September 2026
• Minus: January 2025 – September 2025

The result is October 2025 – September 2026: the most recent 12 months.

LTM EBITDA

LTM EBITDA is the most commonly used valuation metric in mid-market M&A. When a buyer offers “6x EBITDA,” the EBITDA figure is almost always LTM EBITDA — the trailing 12 months of earnings before interest, taxes, depreciation, and amortisation, adjusted for normalised add-backs.

For businesses with a recent period of strong growth, LTM EBITDA may be materially higher than the prior fiscal year EBITDA — which means a seller benefits from being valued on the more current figure.

LTM vs NTM (Next Twelve Months)

Metric	Definition	Used When
LTM	Trailing 12 months	Default for mid-market M&A; based on actual results
NTM	Forward 12 months (projected)	High-growth companies; when forward earnings are significantly above trailing
FY [year]	Completed fiscal year	Simpler, but may be stale

High-growth businesses — particularly SaaS and technology companies with strong forward visibility — are often valued on NTM (next twelve months) revenue or EBITDA because the trailing figure understates the current earnings power of the business. A business growing 40% per year will have NTM EBITDA that is 40% higher than LTM; buyers of high-growth businesses must decide whether to anchor to LTM or NTM.

LTM in Due Diligence

During due diligence, a quality of earnings analysis will typically present LTM EBITDA as the baseline, then layer on adjustments:

1. Reported LTM EBITDA: Straight from the management accounts
2. Less: One-time revenues: Non-recurring contract wins, asset sales, government subsidies
3. Plus: One-time costs: Non-recurring expenses, restructuring, one-off legal costs
4. Plus: Owner add-backs: Excess compensation, personal expenses run through the business
5. Adjusted LTM EBITDA: The normalised earnings base used for valuation

Buyers will apply the acquisition multiple to the Adjusted LTM EBITDA, not the reported figure. This is why EBITDA add-backs documentation is critical for sellers — every well-documented add-back increases the adjusted EBITDA base and directly increases the purchase price.

Why LTM Matters for Sellers

If your business has been growing, LTM EBITDA will be higher than your last full fiscal year EBITDA. This means you benefit from timing: a sale process that closes in a period of strong recent performance will yield a higher valuation than one based on a stale fiscal year figure.

Conversely, if your business had a poor recent quarter, LTM EBITDA may be lower than the prior year figure — which could suppress the valuation multiple a buyer is willing to apply. Understanding your LTM trajectory is essential to timing a sale process correctly.

Amafi helps business owners understand what their business is worth on an LTM basis — and how to position the financials to achieve the best outcome in a structured sale process.