Dave Gilbert bought a $2.8M fractional CFO firm and found half the EBITDA missing

The Setup Dave Gilbert spent roughly 20 years in tech before pivoting to ETA. He had built a credit risk analytics firm serving credit unions, founded multiple software companies, and run global marketing budgets north of $20M at a cybersecurity firm. He wanted an operating business with recurring revenue and a plausible deal-sourcing angle for future acquisitions. A fractional CFO firm (Proven CFO) checked the boxes: recurring engagements, finance buyers as clients, and a stated 36% EBITDA margin. The Deal Gilbert closed in November 2023 at a $2.8M purchase price on $2.1M revenue and a claimed $750K EBITDA. Financing stack: - SBA loan for the majority of the price, including $300K working capital - $500K equity raised from investors he sourced on Twitter - 15% seller note On paper, a clean self-funded search deal. The problems were underneath the numbers. First 100 Days December 2023 was intentionally quiet. Gilbert ran the standard playbook: show up, attend the Christmas party, keep client relationships warm, change nothing, observe. That discipline paid off, because the real picture emerged from January financials, not the CIM. January showed roughly $20K/month of losses after debt service. Working backward, actual EBITDA was closer to $375K, half of the diligence number. The gap came from two places: questionable add-backs tied to family members on payroll, and variable CFO compensation structures that had not been fully disclosed. Customer concentration, reported as under 10%, was actually around 30%. Within the first year, two clients worth ~$500K in combined revenue (about 24% of the book) walked. One was a family office that liquidated after the owner died; the other brought accounting in-house after a seven-year run. Operating Moves Gilbert concluded the business model itself was broken. The sellers' thesis had been to hire bookkeepers and train them up into fractional CFOs over time. Clients did not want junior people learning the job on their account; they wanted operators who had already done it. He rebuilt around that: - Flattened a top-heavy CFO/manager/accountant/bookkeeper stack into experienced client leads paired with accounting managers handling the lower-level work - Recruited A-players with 20-25 years of experience, including executives who had taken companies public or run turnarounds - Turned over 18 of 20 original employees across two years; only 2 remain from the original roster - Took the company fully virtual to strip overhead - Rebuilt go-to-market from referral-only to a full SaaS-style engine: outbound email, direct mail, LinkedIn content, paid ads - Rebranded from Proven CFO to Proven and expanded into fractional CMO, CHRO, deal sourcing, and QofE work for lower-middle-market buyers Operating Lessons - Family-heavy org charts are a diligence red flag, not a quirk. Pull every family member's job description, comp structure, and tenure. Model the business without them. - Add-backs tied to related parties need the same scrutiny as a sell-side banker would apply to an owner's country club dues. Assume they are operating expenses until proven otherwise. - Customer concentration can hide behind portfolio-company structures. A single family office counted...