How to spot FAKE EBITDA, without spending a nickel on due diligence...

Imagine wasting weeks/months of time and pissing away $15K on a QoE only to find out that the company actually only generated $1.5MM in EBITDA.....instead of the $3MM that they promised.

Uh oh.

This actually happens all the time! Especially in one specific industry. In fact, this is precisely why loads of lenders avoid this industry like the bubonic plague.

Can you guess which industry I'm talking about??? ----- Service Contractors

So here's exactly how to avoid this expensive mistake, as follows:
-Step 1: Ask the Seller if the company collects any upfront "Deposits" for new projects.
-Step 2: If the Seller says "yes," you'll want to whip out the most recent Balance Sheet. Now look for two specific items: (#1) look at the current liabilities section and make sure you see a line item labeled Customer Deposits or Unearned Revenue. (#2) look at the current assets section and make sure you see a line item labeled Restricted Cash or Customer Deposits.

If the Balance Sheet is missing either of these line items --- MAJOR RED FLAG.

Here's why: 99% of middle market Service Contractors mistakenly book Customer Deposits as Revenue, which makes EBITDA look bigger than it actually is.

Treating a Customer Deposit like Revenue implies that they've "earned" the money. But this is almost never the case. Remember this...

Customer Deposits = Liabilities (not revenue)

Think about it: if I give you money upfront to get started on a project (ala deposit), that means you are OBLIGATED to do the work. If for any reason you don't do the work, what happens next??? REFUND!

This simple trick will put you lightyears ahead of most searchers, and save you tons of time and money.

Happy hunting!