Acquisitions Anonymous - #1 for business buying, selling and operating

A Profitable Rafting Tour Company - Acquisitions Anonymous Episode 114

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Aug 12, 2022
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INSIGHT

Beware Weighted Average EBITDA Claims

  • The broker uses a weighted average EBITDA to smooth out the 2021 COVID rebound, which inflates perceived profitability.
  • The business's typical EBITDA is much lower, making valuation based on recent high earnings misleading.
INSIGHT

Rising Expenses Hurt Profitability

  • Despite revenue growth until 2019, expenses exploded, eroding profits year over year.
  • This suggests challenges like lack of pricing power or competitive discounting affecting profitability.
ADVICE

Consider Seasonality Timing

  • When buying seasonal businesses, consider timing to understand cash flow and inventory needs.
  • The off-season expenses and working capital can greatly influence ongoing costs.
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