Methodology

One rulebook, applied the same way to every company and every year. Each rule says what is added back, stripped or kept, and every adjustment it makes is listed with its citation on the company's Normalization tab. The full write-up is the methodology documentation.

Rule 1: Acquired-intangible amortization

Added back. Amortization of customer relationships, technology and trade names created by purchase accounting is a non-cash artifact of having acquired. It is the single biggest reason GAAP earnings misprice serial acquirers. The useful-life policy is shown next to the add-back so a long life cannot hide a small add-back.

Rule 1b: Other purchase-accounting artifacts

Stripped symmetrically. Earn-out remeasurements are changes in the price paid, not operating results: a charge is added back, a credit is removed, with no recurrence test. The fair-value step-up on acquired inventory unwinding through cost of sales is added back like Rule 1, and the release of a loss-contract reserve recorded when the contracts were acquired — the same artifact with the opposite sign — is removed.

Rule 2: Capitalized software and development amortization

Kept as a cost. Amortization of internally developed assets is genuine ongoing reinvestment. Where one line mixes acquired and operational amortization and the notes do not split it, the engine refuses to guess and the company goes to review.

Rule 3: Stock-based compensation

Kept as a cost. A real cost of compensating people and a real source of dilution. Management's adjusted figures that exclude it are never used.

Rule 4: One-off items and the recurrence test

Stripped, unless they recur. Impairments, restructuring, one-time litigation and the gain or loss on disposing of a business (ruleset 1.4.0) are stripped. Any item type a company labels one-time in four of the last five years is put back as recurring. Acquisition transaction costs are kept for every company, with no recurrence test (ruleset 1.3.0): acquiring is the business model. Equity-method results inside operating profit are carved out so margins stay comparable.

Rule 5: Growth decomposition

Organic, acquired, FX, price. Reported growth is split into its components from the company's own bridge, and the company's definition of organic is captured and displayed next to the number. An organic residual is only computed against a disclosed base.

Rule 6: Returns on capital

ROIC, ROIIC, return on acquisition capital. Normalized NOPAT over average invested capital, with and without goodwill, both first-class. Three-year ROIIC and return on acquisition capital say whether the acquisition machine still works at scale; each is published only when its inputs are cited.

Rule 7: Leverage and deal-multiple trend

Net debt / EBITDA, multiples, capital deployed. Rising multiples, rising leverage and falling returns on acquisition capital is the pattern of a roll-up reaching for growth. The components are stored per year; the runway is computed only against a leverage ceiling the company states.

Ruleset versions

The figures each rule produces are defined in the glossary.