OPEX (operating expenses) is one of the most widely used indicators for understanding a company's operational efficiency. Along with EBITDA and operating margin, it's one of the metrics that investors, private equity funds, and strategic buyers look at when evaluating a company.
In this guide, we explain exactly what OPEX is, which expenses it includes, how to calculate it with a real example, how it differs from CAPEX, and why it has a direct impact on your company's value in an M&A deal.
What is OPEX?
OPEX is short for operating expenses (gastos operativos in Spanish). It refers to the set of recurring expenses a company incurs to carry out its core day-to-day business: payroll, rent, utilities, raw materials, outside services, marketing, and so on.
Unlike long-term investments (which are recorded as CAPEX), OPEX expenses:
- Are consumed in the short term (usually within the same fiscal year).
- Are fully tax-deductible in the year they're incurred.
- Appear directly on the income statement as operating expenses.
- Don't create an asset on the balance sheet.
It's important to understand that OPEX isn't good or bad in itself: it's simply the cost of keeping the company running. What matters is analyzing it relative to the revenue it generates, which gives a real picture of the company's operational efficiency.
Which expenses are part of OPEX
Typical expenses recorded as OPEX in a company include:
- Payroll and personnel costs: salaries, social security contributions, training, per diems.
- Rent: offices, commercial premises, warehouses.
- Utilities: electricity, water, gas, internet, telephone.
- Raw materials and consumables needed for production.
- Outside services: accounting and administrative services, legal advice, consulting, maintenance.
- Marketing and advertising: campaigns, agencies, tools.
- Software licenses and SaaS subscriptions.
- Transportation and logistics: fuel, courier services, distribution.
- Payments to recurring suppliers.
- Bank fees and operational financial services.
The makeup of OPEX varies widely by sector. In a SaaS company, the biggest items are the technical team's payroll and cloud licenses. In an industrial company, raw materials and energy dominate. In retail, rent and personnel are what count most.
How to calculate OPEX
There are two common ways to calculate OPEX:
- Direct sum of operating expenses: add up all operating expenses for the period (fiscal year, quarter, month).
- Starting from revenue: OPEX = Revenue – Operating profit (EBIT) – Depreciation and amortization.
📊 Practical example: OPEX for an SME
Let's imagine a B2B services company with the following annual figures:
- Revenue (sales): €2,500,000
- Payroll and personnel costs: €900,000
- Rent and utilities: €180,000
- Outside services (accounting, marketing): €120,000
- Software licenses: €60,000
- Other operating expenses: €140,000
Applying the direct calculation:
OPEX = 900,000 + 180,000 + 120,000 + 60,000 + 140,000 = €1,400,000
This means the company needs €1.4 million a year to sustain its operations. To understand whether that's high or low, we compare it with revenue: the OPEX/revenue ratio = 1,400,000 / 2,500,000 = 56%.
Is that 56% good or bad? It depends on the sector. In SaaS companies or mature consulting firms, an OPEX/revenue ratio below 70% is considered efficient. In industrial companies, it can reach 80%–85% without being a concern. What matters is the trend: OPEX growing faster than revenue is always a red flag.
OPEX vs. CAPEX: how they differ
CAPEX (capital expenditures) refers to the investments in long-term assets a company needs to maintain or expand its production capacity. Unlike OPEX, CAPEX:
- Creates an asset on the balance sheet that is depreciated over several years.
- Isn't deducted for tax purposes all at once, but through depreciation and amortization.
- Usually requires specific financing (long-term loans, leasing).
Typical examples of CAPEX include industrial machinery, vehicles, IT equipment, facility refurbishment work, custom-built software, land, and buildings.
The line between OPEX and CAPEX isn't always obvious. For example, fuel for a vehicle is OPEX, but buying the vehicle is CAPEX. Paying for an annual software license is OPEX, but developing your own software can be CAPEX. The general rule is: does it create a lasting asset? If so, it's CAPEX. If not, it's OPEX.
In M&A deals, buyers analyze the two separately: OPEX to understand the business's operational efficiency, and CAPEX to anticipate the future investments needed to sustain operations. A company with low OPEX but high recurring CAPEX may have an attractive EBITDA on paper, but much more limited free cash flow.
Why OPEX matters when valuing a company in M&A
When a private equity fund or a strategic buyer evaluates a company, OPEX is one of the first indicators it looks at. Not just because of the absolute cost, but for three strategic reasons:
1. It determines operating profitability
OPEX is what separates revenue from EBITDA. The more efficient the operating cost structure, the higher the EBITDA and, therefore, the higher the value obtained when applying sector multiples.
2. It shows how scalable the business is
OPEX that grows proportionally more slowly than revenue points to a scalable business: each additional euro of sales generates more margin. This is operating leverage. To learn more, we recommend our post on gross margin and operating leverage.
3. It helps identify optimization opportunities
During financial due diligence, buyers analyze OPEX in detail to detect non-recurring expenses, above-market salaries, rent paid to related parties, or unnecessary outside services. These findings usually feed into normalized EBITDA, which is the basis for calculating the final deal price.
💡 Want to know how your OPEX structure affects your company's value?
At Deale, we help you calculate an indicative valuation of your company and identify the levers that can make it more attractive to investors and buyers. More than 200 deals facilitated.
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How to optimize OPEX without compromising quality
Reducing OPEX is a top priority for any company that wants to improve its profitability or become more attractive ahead of a sale. But it has to be done wisely: aggressive cuts can hurt product quality, the team, or the customer experience.
- Renegotiate supplier contracts: energy, telecommunications, rent, software. These are usually the first candidates due to contractual inertia.
- Audit SaaS subscriptions and licenses: many companies pay for tools they no longer use or have duplicated.
- Review the staffing structure: not just the cost, but role allocation and productivity. Outsourcing non-core tasks can cut costs.
- Digitize manual processes: automating invoicing, document management, or customer service reduces administrative hours.
- Optimize the supply chain: review inventory, logistics, and stock turnover to free up working capital.
Smart OPEX optimization not only improves margins but also reduces operational risk and improves how investors perceive the maturity of the management team.
Frequently asked questions about OPEX
Does OPEX include taxes?
Business activity taxes (IAE, municipal fees) are part of OPEX because they're recurring and operational. By contrast, corporate income tax (Impuesto sobre Sociedades) isn't considered OPEX: it's a tax on profit and is calculated after EBIT.
How does OPEX relate to EBITDA?
EBITDA is calculated by subtracting OPEX from revenue: EBITDA = Revenue − OPEX. That's why a reduction in OPEX translates directly into higher EBITDA and, therefore, a higher company valuation.
Is it better to have low OPEX or low CAPEX?
It depends on the business model. Asset-light companies (consulting, software, services) have high OPEX and low CAPEX. Asset-heavy companies (manufacturing, transportation, retail with physical stores) have more contained OPEX but significant CAPEX. The ideal is a balance that makes sense for the sector.
How do you compare OPEX across companies?
Never in absolute terms, always as ratios to revenue (OPEX/revenue) and by expense category. Comparing the OPEX of a local SME with that of a multinational tells you nothing; comparing their OPEX/revenue ratios does.
