Section 5.5 · the core of the platform
Quality of earnings
Three EBITDA figures, never one. Every seller adjustment is accepted, challenged or rejected on a stated basis, and the platform's own verdict is the number that reaches valuation.
Reported EBITDA
£521,000
FY2025 filed accounts · margin 12.65%
Seller adjusted EBITDA
£673,700
As the seller presents it · margin 16.35%
Platform normalised EBITDA
£585,200
Used everywhere downstream · margin 14.20%
The gap is £88,500. The seller's adjusted figure is 15.1% higher than the platform's. At the selected 3.4× multiple that difference is £300,900 of enterprise value. The platform never adopts the seller's figure to make a deal work.
EBITDA bridge
521.0
Reported
EBITDA
+95.0
Owner
remuneration
+28.0
Family
salary
+14.5
Personal
vehicles
+9.2
Personal
travel
+22.0
Exceptional
legal
−16.0
One-off
grant
673.7
Seller
adjusted
−5.5
Family salary
challenged
−11.0
Legal
challenged
−72.0
Owner
replacement
585.2
Platform
normalised
Figures in GBP thousands. Bar heights are proportional within each direction and are illustrative of the shape, not a measurement instrument. The table below carries the exact arithmetic.
Seller adjustments, one verdict each
| Adjustment | Seller | Verdict | Platform | Basis | Evidence needed |
|---|---|---|---|---|---|
| Owner remuneration add-back | +95,000 | Accept | +95,000 | Director salary and dividend visible in the filed accounts. Add-back is standard and the amount reconciles. | None |
| Family member salary | +28,000 | Challenge | +22,500 | The role includes real administrative work worth about £5,500 at market rate. Only the excess is a genuine add-back. | Job description and hours worked |
| Personal vehicle costs | +14,500 | Accept | +14,500 | Two vehicles, benefit-in-kind returns corroborate the amount. | None |
| Personal travel and subsistence | +9,200 | Accept | +9,200 | Itemised in the seller pack, consistent across all three years, immaterial to the outcome. | None |
| Exceptional legal fees | +22,000 | Challenge | +11,000 | A comparable legal charge appears in FY2023 and FY2024. Recurring at roughly half this level, so half is not exceptional. | Three-year legal cost breakdown by matter |
| One-off grant income | −16,000 | Accept | −16,000 | Non-recurring, correctly removed by the seller. | None |
| Adjustments subtotal | +152,700 | +136,200 | |||
| Owner replacement cost | not applied | Platform only | −72,000 | The seller never deducts this. See the panel below. | Written statement of the owner's duties |
| Result | 673,700 | 585,200 | Reported 521,000 plus adjustments, less replacement cost |
Each verdict is stored with its basis text. The Stage 2 report reproduces this table verbatim, and the narrative may only cite numbers that appear in it.
Section 5.5 · owner dependency
Owner dependency and replacement cost
| Signal | Finding | Weight |
|---|---|---|
| Owner in customer relationships | Named on 4 of the top 10 contracts | Moderate |
| Owner in operational delivery | Asserted at 2 days a week, unevidenced | Moderate |
| Second tier management | Operations manager, 6 years tenure, runs the depot | Low |
| Technical or licensed knowledge | No licence or accreditation held personally by the owner | Low |
| Supplier relationships | Contracts held in the company name | Low |
| Sales origination | Owner leads all tender submissions | High |
Replacement cost £72,000. A general manager at £64,000 plus employer national insurance and pension at £8,000. Deducted inside normalised EBITDA, not shown as a note beneath it, because a buyer who does not do the work must pay someone who will.
Effect on the deal
What the difference is worth
| Basis | EBITDA | at 3.4× | Equity value |
|---|---|---|---|
| Seller adjusted | 673,700 | 2,290,580 | 1,898,580 |
| Platform normalised | 585,200 | 1,989,680 | 1,597,680 |
| Difference | 88,500 | 300,900 | 300,900 |
The asking price of £1,850,000 sits close to the seller-adjusted equity value. That is consistent with a price built off the seller's own bridge. The platform's maximum stays at £1,740,000.
If the two challenged adjustments were accepted in full normalised EBITDA would be £605,200 and the maximum price would move to roughly £1,780,000. That is still below the asking price. The verdict does not change on this evidence, and no combination of accepted adjustments reaches £1,850,000 within the mandate's 1.5× debt service cover floor.
Add-back categories the engine recognises
- Owner remuneration above market
- Family salaries above market
- Personal vehicles
- Personal travel and subsistence
- Non-business insurance and subscriptions
- Exceptional legal and professional
- Restructuring and redundancy
- Related-party rent above market
- Discontinued product or contract losses
- One-off grant and insurance income
- Accounting policy changes
- Capitalised costs that should be expensed
An adjustment outside these categories is not silently dropped. It lands as Challenge with the basis text set to "category not recognised, evidence required".
AcquiScope produces analysis and modelling, not regulated investment advice. Every figure on this screen is illustrative and belongs to an invented business. Verdicts shown are examples of the engine's output format, not a professional quality-of-earnings opinion.