Resources·for portfolio companies
Surviving your first LTM valuation request
What "LTM" means, why your fund is asking for it, and how to calculate LTM revenue and EBITDA correctly from monthly actuals, without double-counting or picking the wrong window.
At some point, such as a follow-on funding round, an annual valuation exercise, or a lender refinancing, someone will ask for your "LTM" numbers, and if this is the first time, the request can feel more opaque than it needs to be. LTM stands for last twelve months: a rolling twelve-month window ending on the most recent month you have actuals for, rather than a fixed calendar or fiscal year.
Funds use LTM figures, almost always LTM revenue and LTM EBITDA, because valuation multiples are typically applied to a trailing twelve months, not a partial year or a single month annualised. It's also the figure referenced in most covenant calculations, so getting it right matters beyond just the valuation conversation.
How to calculate it correctly
The mechanics are simple in principle: sum the most recent twelve months of actuals. Where it goes wrong is usually in what counts as "the most recent twelve months" and what gets included in each month's figure.
If the most recent closed month is June 2026:
LTM revenue = sum of monthly revenue, July 2025 through June 2026
LTM EBITDA = sum of monthly EBITDA, July 2025 through June 2026
Next month, once July 2026 closes, the window rolls forward, dropping July 2025 and adding July 2026. The window always moves; it is never fixed to a calendar year.
The three mistakes that break an LTM figure
Using the calendar or fiscal year instead of a rolling window
LTM is deliberately not the same as year-to-date or the last full fiscal year. If your most recent closed month is June, LTM means July through June, not January through June, and not last year's full annual figure.
Including a divested or discontinued business line
If you closed a product line or sold a division nine months ago, its historical contribution is still sitting in the earlier months of a naive LTM sum. Most valuation conversations expect this backed out, so the LTM figure reflects the business as it exists today. It's the same entity-scope problem covered from two other angles in preparing your first covenant certificate and consolidated reporting across a multi-country portfolio.
Switching EBITDA definitions partway through the window
If your add-back policy changed, such as a new lender agreement, a new fund, or a cleaner internal definition, applying the new definition to only some months of the twelve overstates or understates the true trailing figure. Restate the full window under one consistent definition.
A worked example
Twelve months of monthly EBITDA, most recent month on the right, rolling up to the LTM figure a fund would actually use:
| Month | EBITDA (€k) |
|---|---|
| Jul 2025 | 142 |
| Aug 2025 | 138 |
| Sep 2025 | 151 |
| Oct 2025 | 147 |
| Nov 2025 | 155 |
| Dec 2025 | 160 |
| Jan 2026 | 149 |
| Feb 2026 | 153 |
| Mar 2026 | 158 |
| Apr 2026 | 162 |
| May 2026 | 165 |
| Jun 2026 | 171 |
| LTM (Jul 2025 to Jun 2026) | 1,851 |
Next month, this window drops Jul 2025 (142) and adds Jul 2026 once it closes. The LTM figure moves every single month, not just at year end.
For contrast: the calendar-year mistake from above, applied to this same data, would sum only Jan-Jun 2026 (149 + 153 + 158 + 162 + 165 + 171 = €958k) instead of the full rolling window. That's just over half the correct €1,851k LTM figure, understating the business by €893k, the six months of activity the wrong window silently drops.
What to send alongside the number
- -The full twelve months of monthly detail behind the LTM figure, not just the total
- -An EBITDA bridge if the add-back policy changed at any point in the window
- -Confirmation that revenue recognition and EBITDA definitions are consistent across all twelve months
- -Any divestments or discontinued lines called out and backed out explicitly
For the wider context of where LTM figures fit into a fund's broader KPI expectations, seeKPI frameworks for PE-backed SMEs.
AHQ Financials keeps your LTM figures current automatically
Every month you upload financials into AHQ Financials, your LTM revenue and EBITDA roll forward automatically, correctly windowed, consistently defined, ready whenever a valuation or refinancing request lands.