Articles on transferability, M&A preparation, financial normalization, SBA financing, and diligence. Written by Doug Royal. Published in full below and on Substack.
Revenue is what the business produces while the founder is present. Transferable value is what survives after the founder leaves. The gap between the two is structural.
Most brokers read it as a transition note. Lenders read it as a key-person dependency disclosure. The question they immediately ask changes everything about how the file gets underwritten.
Most CIMs that fail in diligence do not fail because of the numbers. They fail because the financial story depends on conditions that cannot be independently verified.
A structural diagnostic is not an audit. It is a systematic review of whether the business can operate, generate revenue, and withstand scrutiny independently of the founder.
After reviewing founder-led service businesses across multiple sectors, the structural failures are not random. They are predictable. The same five conditions appear in the same places.
Financial normalization and earnings adjustments are not the same discipline. They are often treated as synonyms. The difference matters when an institutional lender starts asking questions.
SBA lenders underwrite businesses, not presentations. What they look for once they are at the table is something most CIMs do not address directly.
Northbridge operates across federal capital governance and business transferability. The environments differ entirely. The structural logic — and the failure condition — is identical.