Hi {{first name|there}},

EBITDA was invented in the 1980s by LBO bankers who needed a quick way to size how much debt they could load onto an acquisition target.

It was never designed to run a business, and yet most CEOs have been using it as their primary performance metric for years. And the gap between what it measures and what actually moves cash, debt capacity, and valuation is exactly where acquisitions - and businesses, fall apart.

Here's what we're covering in this issue:

~ 8 minute read

Every CEO I have worked with knows their EBITDA number. Most treat it like a scorecard. It is not. It is a lens, and a narrow one.

EBITDA is useful when you understand its limitations. And it’s really dangerous when you do not. Here are the seven truths most CEOs learn far too late, and what each one means for the next acquisition decision you sign on.\

You can have strong EBITDA and still run out of cash. I have seen it happen repeatedly.

And that’s because EBITDA strips out the four things that actually move cash through your business: interest, taxes, depreciation, and amortization. Real businesses pay all four. Real businesses also need working capital, real CapEx, and real debt service. None of it lives inside EBITDA.

When a buyer underwrites a deal on your EBITDA multiple, they are buying an earnings proxy. When they close the deal and inherit the actual cash conversion, that is when the real number shows up. Quietly. Months after the wire transfer.

Your equipment ages. Your technology becomes obsolete. Ad the cost of replacing them is real, even if it does not show up in your monthly P&L the way payroll does.

EBITDA strips depreciation out and hides that reinvestment cost. The business looks more profitable than it is. The multiple looks more defensible than it is. Until the buyer adds back the real CapEx requirement and the deal math collapses.

Depreciation is not a non-cash concept. It is a deferred bill.

You still owe the lender. You still owe the government. EBITDA pretends neither obligation exists.

For a CEO running a healthy business, that distinction is academic. For a CEO walking into a refinancing conversation, a sale process, or a downside scenario, the distinction is everything. The cash that has to leave the business to satisfy lenders and tax authorities does not negotiate. It just leaves.

Cash trapped in receivables, inventory, and payables is invisible in the EBITDA number. Two companies with identical EBITDA can have wildly different actual cash positions, depending on how they convert that earnings into deployable capital.

A growing business with stretched receivables can post record EBITDA and still miss payroll. A capital-disciplined business at the same EBITDA level can pay a dividend, fund the next CapEx round, and absorb a quarter of softness. Same number on the page. Two completely different companies.

One-time expenses that happen every year are not one-time. Legal settlements. Restructuring charges. Founder compensation normalizations. Inventory write-offs.

When you see Adjusted EBITDA in a deck or a CIM, the question is not what was adjusted out. The question is which of those adjustments will actually recur next year. The honest answer is usually most of them. Buyers know this. Bankers know this. Boards eventually figure it out.

A higher EBITDA gets you more debt. More debt without real cash flow behind it is a trap, not a tool.

The leverage multiples lenders quote — three times, four times, five times EBITDA — are built on the assumption that EBITDA approximates cash. When the spread between EBITDA and real free cash flow widens, the leverage that looked conservative on the term sheet becomes the leverage that breaks a covenant two years later.

Most mid-market CEOs see the covenant breach coming exactly one quarter before it arrives.

EBITDA was created in the 1980s to help leveraged-buyout investors calculate maximum debt capacity. It was never meant to run a business.

Operators who treat it as a strategy metric end up optimizing for a number that maximizes a buyer's interest, not a number that grows the company.

Great CEOs do not dismiss EBITDA. They contextualize it. Against cash. Against working capital. Against return on invested capital. Against the multiple that will actually hold three years from now.

So frankly, if your strategy is built on EBITDA alone, you are optimizing for a number that does not, will not, can not pay your bills.

The hard truth is that the seven points above are well known. Every M&A textbook covers them. Every banker has them on slide three.

So why do mid-market CEOs keep getting caught by them?

Because knowing the truths is not the same as having the infrastructure to use them. You can read the seven points and nod. The question is whether your finance function actually models EBITDA-to-cash divergence in real time, runs a base, best, and downside view of the multiple under stress, and flags the moment leverage capacity starts narrowing.

Most finance teams sadly do not. They produce an EBITDA number on the monthly close and move on.

Most CEOs know EBITDA doesn't equal cash. Most know depreciation hides a reinvestment cost. Most have heard the working capital warning. But when they sit across from a buyer's CFO, a banker or a board asking for the real picture, they're working from memory and approximation. Not from a live model like The CEO Dashboard sync’d to their actual numbers.

That's the gap that costs you the most.

Not the knowledge gap. The infrastructure gap.

Research on M&A outcomes has been consistent for decades: 70 to 90 percent of acquisitions fail to deliver the value anticipated at signing. The most cited culprit isn't strategy. It's a mismatch between what the EBITDA suggested and what the cash conversion, working capital dynamics, and debt capacity actually supported once the deal closed and the real numbers surfaced.

Sonds obvious but you cannot negotiate a purchase price adjustment after the wire transfer was completed.

Here are a few of our members on what changed when they had the infrastructure in place before the conversation started:

❝ "When I was evaluating a significant acquisition, I had real-time reporting, forecasting, analysis, and presentation ready before I walked into the negotiation room."

— Anna Chu

That is not preparation. That is arriving at the highest-stakes capital conversation of the year with every number already stress-tested on your own data. No approximation. No relying on the banker's model and hoping it holds.

❝ "I went from taking high risk, personal stress, and missing opportunities for acquisitions, to improving our cash flow by 11%, anticipating cash pressure and financial risks months in advance, and protecting enterprise value."

— Bob Milner, CEO, Terbo Enterprises Inc.

Bob runs a U.S. group of businesses with north of fifty million in revenue - want to guess how much that 11% cash improvement is worth to them? And the word that stays with me is "missing." Not just managing the downside risk — actually missing the upside because the infrastructure to model it wasn't there. Both sides of the EBITDA gap cost you.

❝ "In my many years of learning, this is the most powerful, dynamic, complete program I've ever been involved with. This is not just information. This is wisdom, applied, distilled, and immediately usable."

— Larry Tyler, Fractional CFO and Former Commercial Banker

From someone who has sat on the other side of the capital conversation. That framing — immediately usable — is the whole point.

The CEO Financial Intelligence Academy is a 12-month membership that delivers the full financial intelligence system CEOs need to make capital decisions at the level buyers, lenders, and boards expect.

The full setup is in place Day 1 of enrollment with professional, CFO level financial intelligence installed through our exclusive CEO Finance Dashboard™ in the first 48 hours from enrollment.

You will also be automatically enrolled in the next live cohort when it opens later in the year, so you get not just the infrastructure, but also the decision-making frameworks, the executive-level thinking, and the language to run your powerful infrastructure properly.

Three hundred and sixty degrees of financial intelligence. The Academy's curriculum covers strategic finance, capital allocation, enterprise value, EBITDA contextualization, financing capacity, working capital management, M&A fundamentals, and the SAAAS Framework™ — the same structure the world's most capital-efficient CEOs use to move from reactive reporting to forward financial intelligence.

Sessions are designed for CEOs and C-suite leaders running companies from $5M to $200M+. Every framework is delivered for live capital decisions, not academic exercises. You walk away with the thinking, the language, and the decision architecture that runs without you.

The CEO Finance Dashboard™ is built by our team on your data, delivered inside 48 hours of enrollment, and will even be automatically updated every month if you choose.

This is the live three-statement infrastructure that turns the seven EBITDA truths above into operating intelligence by default. Integrated income statement, balance sheet, and cash flow.

The exact spread between your EBITDA and your real free cash flow, calculated monthly. Working capital impact on cash, broken down by receivables, inventory, and payables. Debt service capacity under base, best, and downside scenarios. Leverage covenant headroom across forward years. Valuation and enterprise value sensitivity.

The Academy’s exclusive CEO AI is trained on your Dashboard only for CFO-style guidance around the clock. And everything is protected inside Microsoft's enterprise-grade Azure environment.

You get the answers in seconds that used to take weeks. The actual debt capacity behind your EBITDA. The cash position behind the multiple. The covenant headroom three quarters from now.

This is the strategic finance cockpit a mid-market CEO would otherwise need three hires and twelve months to assemble, all available from day one.

The Academy's CEO Finance Circle™ is where the curriculum and the Dashboard compound into something no course or tool delivers on its own: access to a global community of CEOs and C-suite executives navigating the same capital decisions you are.

Members come from dozens of industries — manufacturing, professional services, healthcare, technology, real estate, and distribution — and from across the United States, Canada, the UK, Australia, and beyond.

Your enrollment is protected by a 30-day money-back guarantee. If you join, participate and apply and still get no value from it, you get your money back. Nothing to lose. Serious upside to gain.

→ Enroll now — academy.oanalabes.com. Your Dashboard goes live inside 48 hours. Curriculum, coaching, and community start the day you sign up. Plus you are auto-enrolled in the next live cohort when it opens.

→ Watch a CEO masterclass — register for the free 60-minute masterclass. The closest preview of how the frameworks come together on a real company's numbers. Most attendees enroll within seven days.

→ Assess where you stand first — take the free CEO Financial Intelligence Score™ diagnostic. Three minutes. Twenty-five questions. A clear personalized read on where the Academy compounds the most value for your specific business.

For multi-seat enrollment or payment terms, email our team at [email protected]. Additional seats are discounted 20%.

Remember: EBITDA is a lens. The next decision you sign on is real money. So if you have been close before but not yet pulled the trigger, the most expensive thing you can do is keep waiting. Just join.

See you next week.

Oana