One page, eight deal types, color-coded by how far the number can drift
EBITDA gets used like it means the same thing in every deal. It doesn't. A CPA firm and a trucking company can post identical EBITDA and have completely different real earnings once you account for what each one has to reinvest to keep running.
This is the read I keep handy when sizing up a target. Use it as a first-glance filter on how much work the number will need.
- Green. EBITDA is a clean proxy. Asset-light, low capex.
- Amber. Works after adjustment. Normalize comp, watch working capital.
- Orange. Gets complicated. Capex is real, or rent has to come back in.
- Red. EBITDA alone is inadequate. Free cash flow is the real metric.
