Most companies treat variance analysis as an explanation exercise. That’s understandable—and strategically useless. A great explanation does not prevent the next miss.
Variance attribution is not blame. It is model maintenance: planned vs actual decomposed, assumptions updated, and intent enforced.
What “control” sounds like in diligence
In valuation conversations, volatility is not a footnote. Volatility becomes a discount rate. When you can’t attribute variance to specific drivers with a consistent method, the buyer hears one thing: uncertainty.
When you can, the buyer hears a different thing: governance. A business that learns on purpose.
Decompose, then tighten
Attribution is the bridge between economics and operating reality. It turns “the market” into a set of explicit drivers: mix, complexity, lead time, capacity, timing, and the assumptions that connect them.
Then it does the hard part: it updates the model and the boundaries leadership will defend next cycle.
Why this changes EBITDA
Because it turns surprises into inputs. And it prevents recurring misses from being normalized as “how the business works.”
A company that can’t learn on paper can’t learn in earnings.
Planned vs actual decomposed. Assumptions updated. That is the unit of governance—and the unit of credibility.