First 48 Hours

How We Read Owner Documents in the First 48 Hours

When an owner sends over a first packet of documents, the clock doesn’t start on full due diligence. It starts on something much simpler: a disciplined 48-hour screen to decide whether this is a business worth spending more time on, what valuation corridor might be realistic, and whether the company looks “bankable” at all.

I focus on buying one understandable SME at a time in Poland and nearby markets, committing my own financial resources alongside bank financing and, where appropriate, co-investors. That means the first 48 hours with a new case have a very clear job: quickly separate “no”, “conditional yes” and “priority” before anyone burns weeks in spreadsheets and calls.

This article walks through how that first reading actually works — and what it tells a potential co-investor.

The first 48 hours: disciplined screening, not due diligence

The early stage is not about catching every risk or renegotiating every line. It’s about three practical questions:

1. Is this business even close to our mandate?

2. Roughly where might valuation sit, assuming no major surprises?

3. Does the company look like it can support sensible leverage over time?

To answer those questions, we do not need a data room with hundreds of files. We need a tight core packet and a consistent way of reading it.

The starter packet: 5–7 documents that matter most

In the first 48 hours, I try to work from a short, standard list:

• P&L (Profit and Loss) for the last 3–5 years

• Balance sheet for the same period

• Basic cash flow view (formal cash flow statement if available, or at least a bridge from profit to cash)

• Tax returns (to check that profit on paper matches what was declared)

• List of loans and leases with balances, interest, maturities and collateral

• Top customers and suppliers with their share of revenue / purchases

• A one-page business overview (what the company does, markets, headcount, locations)

Pretty pitch decks and branding are consciously pushed to the side at this stage. The aim is to see if the hard numbers and relationships form a coherent, investable picture.

Step 1: Revenue and EBITDA trends

The first layer is very simple: how does this business actually earn money over time?

I look at:

• Revenue trend over 3–5 years:

  • flat and steady,

  • gently growing,

  • or jumping up and down without clear logic?

• EBITDA level and trend:

  • Is there a core, recurring EBITDA that shows up year after year?

  • Or is the story one standout year surrounded by weak or negative ones?

• Margin behaviour:

  • Are EBITDA margins within a tight band (say 12–18%) over time?

  • Or did they spike once due to a large one-off contract, subsidy or cost cut that is unlikely to repeat?

The goal here is not to calculate an exact multiple. It’s to answer: is there a real, repeatable profit engine, or are we looking at a one-time story dressed up as a trend?

For a co-investor, this is where the first rough valuation corridor appears — not as a promise, but as “if everything else holds, this is likely a X–Y range, not A–B”.

Step 2: Margin quality and normalisations

Next, I want to see how “clean” the EBITDA is.

Almost every owner has some mix of non-core expenses and one-offs:

• owner salary that is artificially low or high,

• personal items running through the company,

• one-time legal or project costs,

• Covid-era subsidies or emergency measures.

The question is not “are there adjustments?”. The question is:

• Are they transparent and explainable?

• Do they move EBITDA by 5–10%, or do they double it?

• Is there a consistent logic behind what the owner calls “normalised” earnings?

In the first 48 hours I note:

• a base “as reported” EBITDA,

• a sensible, defendable normalised EBITDA,

• and anything that feels like a stretch.

If normalisation is modest and logical, that supports a cleaner story. If “true EBITDA” exists only in a separate Excel with aggressive add-backs, that’s an early warning flag.

Step 3: Debt structure and cost

Then I look at what the business already owes and how that interacts with potential deal financing.

Key questions:

• Total financial debt:

  • level relative to EBITDA (simple Debt / EBITDA multiples),

  • mix of bank loans, leasing and shareholder loans.

• Interest cost:

  • weighted average interest rate,

  • any upcoming repricing or bullet repayments.

• Repayment profile:

  • is debt amortising steadily,

  • or are there big cliffs in 12–36 months?

• Security:

  • which assets are pledged,

  • personal guarantees from owners,

  • how “crowded” the collateral is.

In the first 48 hours I’m not building a full model, but I do want to understand whether the business:

• has room for additional, moderate leverage,

• or is already so stretched that adding acquisition debt would be irresponsible.

Any bank I might speak to will look at similar things. If the existing debt picture already looks fragile, this will either shut down a deal or force a very equity-heavy structure that may not fit most co-investors.

Step 4: Working capital behaviour

A P&L can look healthy while cash is permanently under stress. That’s why I always look at how cash moves through receivables, inventory and payables.

In the first pass, I want to see:

• Receivables:

  • Days Sales Outstanding (DSO) trend: are customers paying within agreed terms,

  • or is there a long tail of overdue invoices?

• Inventory:

  • any obvious build-up not explained by growth or seasonality,

  • signs of obsolete or slow-moving stock.

• Payables:

  • is the business financing itself by simply paying suppliers late,

  • are there consistent delays or disputes?

The simple question is: does this company convert profit into cash in a predictable way? If working capital regularly eats more cash than the business generates, supporting additional debt becomes challenging, even if EBITDA on paper looks attractive.

Step 5: Concentration and fragility

Finally, I look at how exposed the business is to a small number of relationships.

From the top customers and suppliers list, I check:

• Customer concentration:

  • Do the top 3 clients account for 30%, 50% or 70% of revenue?

  • What happens if one of them halves volumes or leaves?

• Supplier dependence:

  • Are there one or two critical suppliers with no real alternative?

  • How quickly could we switch if needed?

• Contract quality:

  • very high revenue concentration + weak contracts = fragile;

  • moderate concentration + clear, long-term agreements = manageable.

In the first 48 hours, this is about flagging structural fragility, not solving it. High concentration can be acceptable if margins, contracts and relationships are strong — but it always affects valuation and leverage.

Why we push pitch decks aside at this stage

Almost every owner has a story to tell: future markets, growth avenues, new products, digitalisation. Those things matter — but not in the first 48 hours.

At this stage I consciously:

• down-weight forward-looking slides,

• and focus on backward-looking facts.

What I want to know is:

• Are the numbers internally consistent across P&L, balance sheet and tax?

• Do profit, cash and debt form a story that makes sense without heroic assumptions?

• Is there enough evidence of discipline to justify moving to the next phase?

There will be time later to underwrite growth and upside. The first job is to test the foundation.

The 48-hour outcome: No, Conditional Yes, Priority

By the end of this first pass, every case goes into one of three buckets:

1. No

   • Too many red flags in basic numbers, debt, cash or concentration.

   • Or clearly outside mandate (sector, size, geography).

   • We stop here and free time for better fits.

2. Conditional Yes (“Under Question”)

   • Core looks interesting, but there are 3–5 specific concerns.

   • We define the exact questions that must be answered before moving forward
     (e.g. true normalised EBITDA, specific customer risk, hidden debt).

   • If the owner can address them, the file moves up; if not, it quietly drops.

3. Priority

   • The business fits the mandate, numbers are mostly consistent, risks look understandable.

   • We move quickly to a deeper review and conversations with the owner,
     knowing what we will focus on in detail.

For a co-investor, this structure matters. It tells you:

• there is a repeatable screening skeleton,

• we are not chasing every shiny opportunity,

• and we say “no” early when the basics do not add up.

For Investors Who Care About Process

If this way of reading SME cases feels close to your own thinking — disciplined first screen, clear red flags, and only then deeper work — there’s an invite-only investor waitlist form on my site. You can briefly outline your mandate and typical ticket there; it’s not a deal blast, just a quiet way to stay aligned so that when an oversize or niche deal clearly fits both sides, I can reach out for a focused, non-public conversation. Capital is always at risk in private deals, and nothing here is an offer — but a shared process makes it easier to decide together when a deal is worth the work.