Mind the Gap

"I'm looking to buy an HVAC business."

EBITDA: £738k

Net profit: £438k

That's a £300k gap.

And it's a massive red flag.

Here's what buyers miss:

The gap between EBITDA and net profit tells you everything.

A huge gap usually means:

High interest payments (overleveraged business)

Aggressive depreciation (old equipment needing replacement)

Tax inefficiencies (poor structure)

All of these eat into actual cash flow.

EBITDA looks sexy on paper. But net profit pays your bills.

Before you buy any business, ask yourself: "Where is this gap coming from?"

If the seller can't explain it clearly, walk away. The best deals have tight gaps.

The worst deals hide problems in the difference.