Qualifying EBITDA Add-Backs - Separating Fact From Fiction | Masterclass скачать в хорошем качестве

Qualifying EBITDA Add-Backs - Separating Fact From Fiction | Masterclass

If you’re prepping for a sale, buying a company, or just EBITDA-curious, this session breaks down EBITDA add-backs (aka adjustments): what qualifies, what gets rejected, and how buyers, PE firms, and QoE providers treat them in diligence. We define EBITDA vs Adjusted EBITDA, show how owner discretionary expenses, one-time or non-recurring costs, rent normalization, and above-market owner compensation roll up into a defensible Adjusted EBITDA, and how that can move enterprise value dollar-for-dollar at deal multiples. We cover Quality of Earnings (QoE), working capital, LOI structures tied to post-QoE EBITDA, financial vs strategic buyer perspectives, and the line between add-backs and synergies. Real-world examples show what the market will and will not accept, how to document and track adjustments monthly, and why clean, conservative, well-evidenced add-backs protect valuation and deal certainty. What you’ll learn Definitions: EBITDA, Adjusted EBITDA (AEBITDA), add-backs/adjustments Common categories: non-recurring, non-operational, owner discretionary, rent normalization, above-market compensation, services-for-equity Market reality: which add-backs pass, which need strong defense, which die in QoE -QoE 101: what firms test (revenue quality, retention, concentration, working capital, sustainability) Buyer lens: financial vs strategic; add-backs vs synergies; impact on debt sizing and covenants How to bake Adjusted EBITDA into your model and avoid retrades Case studies across multiple industries Why it matters: At a 6x multiple, a 250,000 dollar accepted add-back can add 1.5 million dollars to enterprise value. Clean books, documented adjustments, and a pre-market QoE can be the difference between closing at price vs deal fatigue and a haircut. Pro tips: Track add-backs monthly with receipts and memos; use one card for pass-throughs Be conservative; credibility beats wishful thinking Build your M&A team early (CPA, tax, banker); align on working capital and QoE scope Know your audience: PE prioritizes durable cash flow; strategics price in synergies (but rarely pay you for them) #EBITDA #AdjustedEBITDA #AddBacks #QualityOfEarnings #MergersAndAcquisitions #PrivateEquity #BusinessSale #Valuation #DueDiligence #WorkingCapital #LOI #SMBFinance #SellSide #BuySide #DealMaking #OwnerCompensation #RentNormalization #Synergies #InvestmentBanking #MiddleMarket TIMESTAMPS / CHAPTERS 00:00 - Intro: qualifying EBITDA add-backs (fact vs fiction) 00:38 - Definitions: EBITDA vs Adjusted EBITDA; add-backs as adjustments 02:20 - Guest intros and session focus 02:52 - Why multiples ride on EBITDA; valuation implications 04:02 - Example: 250K add-backs at 6x equals 1.5M enterprise value 05:59 - What buyers accept vs reject; documentation and credibility 08:03 - Operator best practice: track add-backs monthly 10:36 - When add-backs dominate margin, expect pushback 11:06 - Typical categories: one-time, non-operational, owner discretionary 12:43 - Normalizing owner compensation; related-party rent adjustments 13:20 - Services in exchange for equity and when they qualify 15:09 - Co-mingled expenses and keeping it clean 15:16 - Quality of Earnings (QoE) explained; what firms test 18:58 - QoE for smaller deals and why it still matters 20:12 - LOIs tied to post-QoE Adjusted EBITDA 21:10 - Buyer perspective: true post-deal profitability 22:58 - Add-backs vs synergies and negotiation reality 24:16 - Know your audience: financial vs strategic buyers 26:48 - Deal closability and trust 27:01 - Real-world examples: what flew and what didn’t 34:19 - Key takeaway: burden of proof is on the seller 35:46 - Playbook: pre-market QoE, model AEBITDA, itemize adjustments 37:31 - Maximize value: auction plus clean add-backs plus A-team 38:25 - Wrap UP