We launched a highly profitable new automated service line eight months ago that is scaling rapidly, but the buyer's Quality of Earnings auditors want to use a simple historical twelve-month average that dilutes this growth. How do we defend a run-rate EBITDA adjustment?

Question

Tyler Smith · Accepted Answer

A simple trailing twelve-month average is the standard playbook for buy-side auditors because it dilutes the financial impact of your recent growth. If you launched a highly profitable, automated service line eight months ago, a simple historical average fails to reflect the true forward-looking earning power of your business. This can result in you leaving millions of dollars on the table at the closing table.

You must build a compelling, data-backed defense for a run-rate EBITDA adjustment.

- Isolate the revenues and direct costs associated with the new automated service line to prove its high-margin profile.
- Annualize the most recent three months of performance to demonstrate the true run-rate, showing that this volume is sustainable and not a temporary spike.
- Present weekly Scorecard metrics and contract pipelines showing that the customer adoption rate is stable and continuing to climb.

Your operational discipline is your best defense. By using your V/TO® to show how this new service line aligns with your long-term strategy and proving that your automated workflows are fully documented and scalable, you take the risk out of the equation. This operational proof forces the Quality of Earnings auditors to accept a run-rate adjustment, ensuring you are compensated for the actual trajectory of your business.