Four company sizes · Three assumed drag rates · Annual and five-year equivalents
Revenue × assumed drag percentage = annual equivalent
| Revenue | 10% | 20% | 30% |
|---|---|---|---|
| $10M | $1M | $2M | $3M |
| $25M | $2.5M | $5M | $7.5M |
| $50M | $5M | $10M | $15M |
| $100M | $10M | $20M | $30M |
Illustrative burden equivalents, not audited waste, realized cost or recoverable EBITDA.
Annual equivalent × 5, assuming no revenue or rate change
| Revenue | 10% | 20% | 30% |
|---|---|---|---|
| $10M | $5M | $10M | $15M |
| $25M | $12.5M | $25M | $37.5M |
| $50M | $25M | $50M | $75M |
| $100M | $50M | $100M | $150M |
Simple five-year accumulation—not mathematical compounding or a forecast.
What the figures mean: they show the scale implied by assumed percentages of revenue. They do not mean that all those dollars are cash losses or automatically recoverable. Separate verified expense, consumed paid capacity and forgone contribution before claiming value.
Same $50M revenue. Same assumed 5× EBITDA multiple. Different operating earnings.
$50M revenue × 20% EBITDA margin = $10M EBITDA. At 5×, illustrative enterprise value = $50M.
$50M revenue × 12% EBITDA margin = $6M EBITDA. At the same 5×, illustrative enterprise value = $30M.
An 8-point EBITDA-margin difference × $50M revenue × a 5× multiple.
This is an illustration, not a drag valuation. It does not establish that structural drag caused the margin difference or that all of it can be recovered. The $20M difference already reflects the modeled EBITDA gap; do not count it again as an additional tax. Actual transaction multiples and buyer judgments may differ.
These are possible second-order effects of the same operating conditions—not automatic extra charges.
Decisions and deliveries take longer than the work itself requires.
Capable people spend their best hours correcting the arrangement.
A buyer scrutinizes dependencies and how durable the earnings really are.
New customers, sites and acquisitions inherit old workarounds.
While you finance the same friction, a competitor with a lighter structure may use its capacity to move faster, price sharper and seize the opportunity.
Find the recurring work. Establish what it truly costs. Protect what matters. Then decide whether the evidence justifies more resources, a different arrangement, both—or neither.