Monthly Archives: April 2010

The EBITDA Trap – How NOT to Get Trapped

The last post explored the EBITDA Trap.  The EBITDA Trap is notion that when one purchases a company the price is based, typically, on a multiple of EBITDA – which is shorthand for Gross Cash Flow.  However, as buyer you … Continue reading

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The EBITDA Trap – A Must Read for Every Buyer

I could not let the subject of EBITDA off the hook until I took a couple of more minutes to explain the “EBITDA Trap”.  What is the EBITDA Trap?  It’s when you value and pay for a company based on … Continue reading

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What the Heck is EBITDA?

MacGladrey Capital Markets LLC just completed an excellent report on the state of M&A.  I was just about to summarize their findings when I realized that I should take a step back.  In almost every discussion of valuation EBITDA is … Continue reading

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Know Thy Industry – Part II

What Transpired It’s hard to say if the seller was aware of the changing landscape that was affecting the business.  Was it strictly good timing upon the sale?  One can never say for certain and my partner and I had … Continue reading

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It’s a Brave New World…

…so you better get used to it. We all know the world has changed in the past 18 months, and in keeping with those changes potential purchasers of companies need to change their due diligence focus as well. In that … Continue reading

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Anyone Can Pay $1 for $1…

…but the real challenge is to be able to pay 80 cents (or less) for that same $1 of value. Buying a company is no different. The seller wants to receive $1.00 of value (or more) for the $1.00 of … Continue reading

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My Mistakes – Starting my Mea Culpa – Know Thy Industry

There is a real truth about buying a business in an industry in which you have not had previous experience.  The fact is that no matter how much due diligence, research and fact finding you will attempt – the fact … Continue reading

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My Mistakes – Starting my Mea Culpa Part I (Of Many)

Well as hard as it is I figure the only practical way to educate readers is through an examine my screw-ups.  In keeping with the theme of the blog I want to make sure it means something to you and … Continue reading

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Revenue Quality – Overlook This at Your Peril Part II – Or How Not to Get Fu%ked

Last wrote about the five aspects of revenue analysis that one must be cognizant of.  A little bit more in depth now we shall go.  For number (1) revenue that’s concentrated in only a few clients – this should seem obvious – if a … Continue reading

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Revenue Quality – Overlook This at Your Peril Part I

Revenue quality is a key component of your financial review.  If  you miss this – you have probably missed the boat and will find yourself with expectations of a company that cannot be met.  In other words you may have … Continue reading

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