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

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?

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

Reply by a searcher
from University of California, Davis in Los Angeles, CA, USA

I get the frustration, given that QofEs can be expensive and time consuming. But this is a part of the M&A process. Best be prepared to reprice, restructure, or walk away if the seller refuses to negotiate. Better to lose the QofE cost than to overpay for a business with misrepresented earnings.

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