Add-backs are expenses run through a business's books that a buyer agrees to add back to profit when calculating SDE or EBITDA, because they are personal, one-time, or would not continue under new ownership. Common examples are the owner's salary, a personal vehicle, family members on payroll who do not work, and a one-time legal fee. Not every add-back a seller proposes survives a buyer's scrutiny.
Why it matters
Every add-back you can support with records raises the earnings a buyer is willing to apply a multiple to.