Hello everyone, I am looking at a financial statement for a potential deal and was curious if someone can help.

When evaluating Adjusted EBITDA, particularly for asset heavy businesses like manufacturing, is there anything you should be specifically on the lookout for? Something where the adjustment may not be legit or too small so the earnings are bigger than what they really are?

Example, the depreciation on the machines is added back and deflated or not as high as it should be, which then causes the EBITDA to be inflated leading to a higher purchase price for the seller?

Those types of red flags. What do you keep an eye out for.