Ask any experienced buy-side diligence team what actually moves price during a deal, and the honest answer is rarely "the business got worse." It's usually that the seller's numbers turned out to be less defensible than they looked in the first conversation — and the buyer used that gap as leverage.
Where the gap actually comes from
- Add-backs the seller can describe but can't substantiate with a real document — an owner's salary adjustment nobody can trace to a payroll record, a "one-off" cost that turns out to recur every year
- Revenue figures that don't reconcile cleanly against bank deposits or a trial balance
- A document request list a buyer's diligence team assumes exists (a customer concentration breakdown, a supplier register, an org chart) that simply hasn't been prepared
- Numbers quoted verbally in the first meeting that shift slightly once someone actually pulls the underlying accounts
None of these are dishonesty. They're usually just the normal state of a business's records before anyone has gone through them with a buyer's scrutiny in mind. The problem is the timing: found during live diligence, each one reads as a red flag and becomes a renegotiation point. Found and resolved beforehand, it's simply... resolved.
What "recast" actually means
A recast takes reported EBITDA and adjusts it for the add-backs a buyer would reasonably accept — above-market owner compensation, genuinely personal expenses run through the business, real one-off costs — but only the ones that can be substantiated with an actual source document. An add-back with no evidence behind it doesn't quietly disappear from the bridge; it gets flagged as unsupported, because an adjustment a buyer's diligence team can immediately unwind isn't worth the credibility it costs when they find it.
Running your own diligence first
The core idea of doing readiness work before going to market is simple: put the business through the same scrutiny a real buyer's diligence team would apply, before that buyer ever sees the numbers. A documentation completeness check, a financial verifiability read (how much of the story is independently derivable from real documents versus simply declared), and an open-risk count — tracked as three separate, un-blended numbers, because averaging them together would hide exactly the kind of weakness a buyer will find regardless.
This is the concrete mechanism behind Handover's readiness scorecard and EBITDA bridge — the same recast engine and document checklist a live engagement uses, run proactively. An add-back with no supporting document is tagged as unresolved rather than folded into the headline number. The goal isn't a bigger EBITDA figure; it's one that survives contact with a real buyer's diligence team.