Unpopular opinion: If you overstate EBITDA by 20%, that's fraud.

professional profile

December 01, 2025

by a professional from Harvard University - Harvard Business School in Atlanta, GA, USA

I don't care if your lawyer calls it "aggressive negotiation." I don't care if your broker says "everyone does it." You're telling me you don't know the difference between taking home $1M vs $800k? That's $200,000. Not a rounding error. Not a "misunderstanding." I see this weekly. Sellers claiming numbers they know are BS, hoping buyers won't dig deep enough. Then acting shocked when caught. "Oh, we included that one-time contract." "We projected Q4 would be strong." "Our bookkeeper made an error." Stop. You know what you take home. Every business owner does. Here's what kills me: The same people defending this would fire an employee for lying about their sales numbers by 20%. But when it's time to sell? Suddenly it's "just business." No. It's fraud. And it's why 50% of my QoEs find material issues. Where do you draw the line? 20%? 30%? 50%? Or are you one of those "buyer beware" people who thinks lying is fine as long as you don't get caught?
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Reply by a searcher
from Monmouth University in New York, NY, USA
^redacted‌ you would be surprised how many sellers don't understand how the broker is marketing the business. I've been in situations after a brief FDD period with basic financials, where I get the opportunity to ask the owner for clarity and the broker steps in to answer. Diego is right, better to lose the QoE spend vs overpaying for a business
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Reply by a searcher
from University of Pennsylvania in Philadelphia, PA, USA
Hot take-- it's probably good that they do it. When you diligence the business and see that difference, it's helpful in understanding who you're dealing with and what type of culture they're leaving behind. The bigger the delta the bigger the red flag.
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