EBITDA starts from net profit and adds back interest expense, taxes, depreciation, and amortization — four items that have nothing to do with how well the underlying business operates, and everything to do with how it's financed, where it's taxed, and how its accountants depreciate assets on paper. What's left is a rough proxy for the cash-generating power of the core business.
Investors and acquirers favor EBITDA because it allows an apples-to-apples comparison between companies with very different capital structures or tax situations — a company funded entirely by equity and one funded heavily by debt can look very different on net profit alone, purely because of interest expense.
EBITDA is not the same as cash flow and has been criticized for making leveraged or capital-intensive businesses look healthier than they are, since it ignores both debt payments and ongoing capital expenditure. It's a useful comparison metric, not a substitute for looking at actual cash in the bank.