An expense or charge added to a business's reported net income when calculating Seller's Discretionary Earnings (SDE) or adjusted EBITDA. Add-backs fall into three categories: owner-personal expenses (compensation, personal vehicles, personal insurance), non-cash charges (depreciation, amortization), and non-recurring costs (one-time legal fees, casualty losses). Each add-back must be documented, genuinely discretionary or non-operational, and accurately valued. Unsupported, recurring, or inflated add-backs are a common source of disputed valuation in due diligence. (Also see SDE, Adjusted EBITDA, QoE Report.)
Financial Analysis
Add-back
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