Most EBITDA bridges look clean in the model. This diagnostic tests whether the improvement actually lands — or leaks through execution, pricing and working capital before it reaches cash.
Run the Diagnostic ↓EBITDA improvements in the budget rarely translate one-for-one into the business. Pricing doesn't hold. Volume mix shifts. Working capital absorbs cash. Execution falls short. The gap between modelled and delivered EBITDA is where enterprise value is destroyed.
This diagnostic identifies where your EBITDA bridge is most likely to break — and quantifies the risk before it becomes a surprise.
Price increases approved in the budget are not fully realised. Discounting, rebates, freight and mix erosion absorb 30–60% of the planned improvement.
Revenue growth is assumed at budgeted margin. In practice, mix shifts to lower-margin products, channels or customers — compressing EBITDA even when revenue meets plan.
EBITDA improves but cash does not. Inventory build, debtor blow-out or payables compression absorbs the earnings before they reach the bank.
Enter your EBITDA plan and actual performance. The diagnostic quantifies the gap and identifies the likely source.
A credible EBITDA bridge answers three questions that most management teams avoid: Is the pricing improvement structurally embedded? Is volume growth at target margin? Is EBITDA converting to cash?
Each gap in the EBITDA bridge points to a specific diagnostic. Follow the pressure to the source.
Diagnostics identify where the gap sits. The mandate determines how it gets fixed — and how fast.
Discuss a MandateAn EBITDA bridge maps the movement from one period's EBITDA to another — identifying whether pricing, volume and cost changes are delivering the planned improvement. In industrial and distribution businesses, the gap between modelled and delivered EBITDA is typically 20–40% of the planned improvement.
The bridge breaks for three structural reasons. First, pricing improvements are modelled as if fully captured but realised pricing is consistently lower due to discounting, rebates and execution gaps. Second, volume growth is modelled at average margin but actual growth often comes from lower-margin segments. Third, EBITDA growth does not equal cash improvement when working capital changes absorb the earnings before they reach the bank.