Middle-market case — MidCap Software Inc (local-GAAP reporting, $50m EBITDA) is being sold to a US PE firm. How do you structure the local-GAAP-to-IFRS valuation bridge?

• Starting data (assumed): local-GAAP EBITDA $50m, local-GAAP net debt $30m.
• IFRS 16 lease add-back: the software firm's operating leases (offices) run about $3m p.a., so +$3m to EBITDA — IFRS EBITDA $53m.
• Software R&D capitalization: local GAAP capitalizes conservatively; IFRS allows capitalization of development costs under IAS 38 (typically +1–2% EBITDA) — IFRS EBITDA $54m.
• Pension bridge: MidCap Software Inc has legacy direct commitments with a $25m local-GAAP DBO; the IFRS DBO at current discounting is $32m (+28%) — net-debt adjustment +$7m.
• Lease-liability adjustment: +$12m right-of-use lease liability on the IFRS balance sheet.
• Total net-debt adjustment: +$19m.

```
EV (IFRS): 12 × $54m EBITDA = $648m
Net debt: $30 original + $19 adj. = $49m
Equity (IFRS): $648 − $49 = $599m
Equity (local GAAP): 12 × $50 − $30 = $570m
```

The IFRS bridge delivers +$29m (~+5%) more equity value — relevant for the sell-side.