Illustrative diligence case

A clean EBITDA bridge can still change the deal.

This example is synthetic. It demonstrates how Marston Row Group structures evidence and transaction consequences.

It does not describe a client, engagement, or actual transaction.

01 / Situation Start with the seller's number

The seller presents $2.85 million of adjusted EBITDA.

Reported EBITDA is $2.25 million. The seller adds back another $600,000.

The buyer needs to know which adjustments survive source testing and ownership change.

01 Reported EBITDA
$2.25 million before seller adjustments.
02 Seller add-backs
$600,000 across owner items, one-time costs, and proposed normalization.
03 Seller-adjusted EBITDA
$2.85 million before source testing and standalone costs.
02 / Evidence Test what survives

Source testing supports only part of the seller's bridge.

01

$240,000 of add-backs are supported.

Source records support specific owner items and genuinely nonrecurring costs.

02

$360,000 does not survive testing.

Several proposed adjustments recur, lack support, or remain necessary after close.

03

$310,000 of standalone cost appears.

The buyer must replace owner labor and shared services that disappear at close.

04

Transferable EBITDA becomes $2.18 million.

The supported earnings view is $670,000 below the seller-adjusted figure.

03 / Transaction Follow the economics beyond EBITDA

The earnings bridge is only part of the buyer's decision.

01 Working capital
Normalized working capital exceeds the draft peg by $420,000.
02 Collections
Days sales outstanding rises from 47 to 68 days over twelve months.
03 Concentration
The largest customer represents 31% of trailing revenue.
04 Open question
The buyer still needs evidence on recent collections and customer continuity.
04 / Decision Name what changes

The diligence answer becomes a transaction action.

  1. 01

    Reprice the earnings basis

    Use the supported earnings view instead of the seller-adjusted figure.

  2. 02

    Reset the working capital discussion

    Address the $420,000 gap before finalizing close mechanics.

  3. 03

    Request decisive evidence

    Resolve collections and customer continuity before treating revenue quality as settled.

  4. 04

    Escalate only if required

    Bring in another specialist only when the remaining question reaches their authority.

05 / Output Keep the evidence visible

A useful deliverable shows the answer and its limits.

01

Decision summary.

The buyer sees what changed, why it matters, and what remains unresolved.

02

Earnings bridge.

Every adjustment is tied to its support, treatment, and transaction effect.

03

Supporting schedules.

Cash, working capital, revenue, and other analyses remain tied to source evidence.

04

Open-item register.

Missing evidence stays visible, including the specific facts that could change the conclusion.

Have a live deal?

Send the target, stage, timing, and the financial question that still feels unresolved.

Discuss the transaction