Operational Due Diligence
Ten years of P&L responsibility across multi-unit operations. Direct experience with the operational dynamics that determine whether adjusted EBITDA translates to realized cash flow, particularly in businesses where the complexity lives below the financials and the data doesn't come clean.
I provide operational diligence for acquisitions. The output is an EBITDA durability assessment: what's at risk, what's recoverable, and what the sustainable range looks like under professional management. It includes a value creation roadmap with sequenced initiatives, realistic timelines, and capture probability.
What portion of adjusted EBITDA is at risk from key-person departure, customer concentration, or process fragility? What's recoverable through operational improvement? The output is a sustainable range, not a point estimate.
Where value leaks through process gaps, manual workarounds, system fragmentation, and deferred maintenance. Quantified as recoverable GP with capture probability and timeline.
How the business actually creates value. Unit economics, capacity utilization, growth constraints. What breaks at scale and what enables it.
Explicit assessment of each condition required for the deal to work. Supported, supported with caveats, or not supported — with evidence.
For platform and tuck-in acquisitions: realistic assessment of integration timeline, resource requirements, and execution risk based on management capability and complexity.
25–40 page memorandum structured for decision-making. Executive summary with investment recommendation. EBITDA durability analysis showing sustainable range. Value creation roadmap with sequenced initiatives, owners, timelines, and capture scenarios. Deal structure implications with precedent citations.
What must be true for this deal to work? Explicit conditions with assessment of each. Frames everything that follows.
Unit economics, capacity constraints, seasonality, working capital dynamics. How the business makes money and what limits growth.
QoE-adjusted EBITDA stress-tested operationally. Risk adjustments for key-person, concentration, process fragility. Opportunity adjustments for recoverable value. Output: sustainable range with confidence levels.
Process gaps quantified as recoverable GP. Fix cost, difficulty, timeline for each. Total recoverable value translated to enterprise value at deal multiple.
Regression-based anomaly detection. Add-back validation. Related-party identification. Pro forma cost structure under professional management.
Downside, base, upside with probability weighting. Simulation modeling for complex situations with interdependent risk factors.
100-day plan: stabilization, quick wins, optimization. Each initiative with owner, value, timeline, dependencies. Capture scenarios at 25/50/75% with probability-weighted expected value.
How findings map to escrow sizing, holdback triggers, earnout structure, working capital peg. Market precedent for each mechanism.
Full operational diligence with EBITDA durability analysis, scenario modeling, and 100-day value creation roadmap.
Pre-LOI assessment using public sources: employee reviews, permit history, complaint velocity, competitive positioning.
Post-close operational assessment. Process variance diagnosis, standardization roadmap, EBITDA recovery with implementation plan.
Funded search, independent sponsors, lower middle market PE.
Quality of Earnings
"Adjusted EBITDA is $2.1M."
Value Creation Assessment
"Adjusted EBITDA is $2.1M. $180K is key-person dependent — retention mechanism required, $75K holdback recommended with 18-month vest. Customer concentration at 40% in top 3, 90-day termination provisions — contract extensions as closing condition capture $220K in risk-adjusted value. Identified GP recovery: $150K via scheduling optimization, 65% capture probability at 18 months. Sustainable EBITDA range: $1.85M floor, $2.4M ceiling. 100-day roadmap attached."