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Summary

Patrick O'Connell, a quality of earnings specialist, discusses the importance of analyzing the true earnings potential of a business before buying or selling. He highlights five red flags to watch out for in a potential deal: pending lawsuits, high employee turnover, inconsistent financials, declining market share, and key dependence on a few customers. Patrick emphasizes the need for thorough due diligence and understanding the story behind the numbers. He also provides insights into evaluating two specific deals, a tech wholesaler and a medical tech blog.

Chapters

00:00 Introduction to Patrick O'Connell and Quality of Earnings
02:12 Unpacking the Concept of Quality of Earnings
08:29 Red Flag #1: Pending Lawsuits
13:10 Red Flag #2: High Employee Turnover
16:24 Red Flag #3: Inconsistent Financials
21:06 Red Flag #4: Declining Market Share
22:59 Red Flag #5: Key Dependence on a Few Customers
26:19 Evaluation of a Tech Wholesaler Deal
32:21 Evaluation of a Medical Tech Blog Deal with 50 Million Visitors

Keywords

quality of earnings, red flags, due diligence, pending lawsuits, employee turnover, inconsistent financials, declining market share, cu