Further to this and dcaranda, EBITDA is used for valuations because it describes the cash flow the business has available to pay various stakeholders before any financial structures are taken into account. There are three people who have a claim on the cash a company generates after paying operating expenses: debt holders, the government, and shareholders. Their claims on the money go roughly in that order, so in other words the shareholders get what's left (directly via dividends or stock buybacks or indirectly via an increase in the equity value) after the debt holders and the man are paid.

The thing is, however, how much you owe the government is affected by how much debt you have (i.e. your financial structure), because the debt interest is deductible. It's largely because of this that EBITDA is the preferred thing to use, as opposed to say earnings or cash flow, because it enables you to compare companies at a fundamental level unaffected by whatever financial structure they might currently have. One of the things PE guys like to do is fiddle with the financial structure (aka load it up with debt ;-), so it's important to understand the value ex whatever impact the current structure might have. But even if that's not your motive, it's a useful measure for the same underlying reasons.

It's also true that EBITDA is a useful number for PE because it tells you the amount of money available to service debt, as dcaranda points out.