Take Five #024: Why EBITDA can be a terrible measure of profitability
Codely v2.0 public release is here
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What has changed in our latest release?
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All new features available for all public channel users
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Coding collaboration with over 200 users at once
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Real-time code save every 0.1 seconds
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Take Five #024: Why EBITDA can be a terrible measure of profitability
1. Is your business a “Lindy” or a “Turkey”?
A framework about a company’s longevity, from @10kdiver:
Thus, whenever we buy a company for our portfolio (with the intention of holding it for the long term), we're making an implicit bet about the company's LONGEVITY.
- How long the company will survive,
- How long it will continue growing and paying us dividends, etc.
Capitalism is brutal. Companies die all the time.
So, if we're paying up for a company, we should be reasonably sure about its LONGEVITY.
As investors, we need to cultivate the ability to identify companies that will stick around and stay strong for years and years.
Read the rest of @10kdiver’s thread here.
2. The big problem with using EBITDA as a measure of profitability
The Secret CFO @SecretCFO
From @SecretCFO’s thread here. Here’s another nugget from SecretCFO: why you should not include forward forecasts in your management accounts →
3. What you should be looking for in an M&A advisor
Great podcast episode from Mineola Search Partners on:
- How to think about selecting an M&A advisor,
- Understanding all the fees charged by M&A advisors,
- And preparing to sell your business
Our favorite question from the pod:
The most frequently asked question that most sellers get from buyers is simply “Why Are You Selling?”. What buyers are really looking for when they ask this question, and what constitutes a “good” answer vs. a “bad” answer?
Listen to the episode from Mineola Search Partners here.
4. Building a HVAC Empire in 5 years
Great episode from Will Smith at Acquiring Minds with Sam Turner, who has acquired 3 HVAC companies in the UK.
…get into the nitty gritty of his search, including:
- his first acquisition (he's about to complete his 3rd),
- getting a loan without the benefit of the SBA,
- how the businesses he buys are run and by whom,
- why HVAC?
- buying big or buying small,
- and much more.
Find links to listen to the podcast on your service of choice here.
5. The SBA is going to make smaller loans much more affordable starting October 1st
Upcoming changes to fees for some SBA 7(a) loans, in one thread:
Read the rest of @SBA_Ray’s thread here. Also, another goodie on understanding your SBA lender’s approval process here.
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