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Emily Holdman Profile picture
Emily Holdman
@emilyleldridge
Inexhaustibly curious. VP of @adventur_es. Proud book hoarder. #MIZ
Sep 13, 2018 • 5 tweets • 1 min read
Quick Lower Middle Market Lesson: Cash is still king.

A company may be "highly profitable" in terms of adj EBITDA. Dig beneath that number and you may find a situation in which cash distributions are impossible. In fact, the company eats cash.

How could a company eat its cash? We most commonly see 3 ways:

1. CAPEX: We regularly see orgs where annual maintenance CAPEX is 1/5-1/3 of EBITDA (or more). That's *before* thinking about growth investments in new equipment to increase capacity/capability.