What is TTM (trailing twelve months)? Definition, formula and example

This is for buyers reading their first listing, and for owners who want to know which year a buyer will price. By the end you will know what TTM means, how to work it out, and why it can move the price of a business.

The definition in plain words

TTM stands for trailing twelve months. It is a business's results for the last 12 months in a row, counted back from the latest month with closed books. You may also see LTM, for "last twelve months". It means the same thing.

A tax return or a year-end statement covers one fixed year. Say it is now October. The last full year ended ten months ago. A lot can change in ten months. TTM fills that gap. It takes the most recent 12 months, so it shows the business as it is today.

You can work out TTM for any line on the income statement: revenue, gross profit, EBITDA or SDE. In small-business deals, TTM SDE or TTM EBITDA is the number most offers start from.

The formula

Wall Street Prep's TTM explainer gives the standard formula:

TTM = latest full-year figure + current year-to-date figure − prior year-to-date figure

In plain words: take last year. Add the months you have so far this year. Then take away the same months from last year, so you do not count them twice. What is left is exactly 12 months.

A second way gives the same answer. If the seller has monthly profit and loss statements, add up the last 12 months one by one. Many buyers do both. If the two answers do not match, ask why.

Worked example

Here is an illustrative home-services company. The numbers are made up but add up. The fiscal year ends in December, and the books are closed through June 2026.

TTM EBITDA = $480,000 + $290,000 − $230,000 = $540,000.

Now say a buyer offers 4x EBITDA. On the 2025 number, the price is $1,920,000. On the TTM number, it is $2,160,000. That is a $240,000 gap from one choice of period. This is why both sides care which 12 months they use.

Where TTM shows up in a deal

The listing. Most listings and teasers show TTM revenue and TTM profit, or the last full year. Check which one you are looking at before you compare two businesses.

The offer. A letter of intent often sets the price as a multiple of TTM EBITDA or SDE. Write down the exact months in the LOI, such as "TTM ended 30 June 2026". It avoids a fight later.

Due diligence. A quality of earnings report usually rebuilds TTM from the monthly books and bank statements. It also checks the add-backs used to reach adjusted TTM profit.

Financing. Lenders often look at recent results as well as tax returns. Be ready to share interim statements for the current year. Many buyers find the lender uses those to check that cash flow covers the loan.

Before closing. Deals can take months. By closing, a newer TTM period exists. If profit has dropped, the buyer may ask to re-price. If it has grown, the seller may want more. Many buyers and sellers find this question comes up late, so it pays to agree up front how it will be handled.

Common mistakes

Mixing periods. Comparing one business's TTM with another's 2024 year is not a fair test. Put every option on the same basis.

Ignoring the trend. A TTM number is one point. Look at TTM month by month for the last two or three years. A rising line and a falling line can give the same TTM today.

Missing seasonality. A landscaping or HVAC business can have a big summer and a slow winter. TTM still covers a full year, which helps. But a single strong month can still push it up or down, so ask what happened in each month.

Trusting unclosed months. Interim months are often not reconciled. Ask whether the books for those months are closed, and check them against bank deposits.

Counting one-off revenue. A large one-time job inside the TTM window can make profit look higher than it will be next year. Ask the seller to list any one-off work.

If tax or accounting questions come up, talk to a CPA. If you want help reading a seller's numbers, our buy-side team can walk through them with you.