What are add-backs?
Add-backs increase adjusted EBITDA by expenses that disappear after the sale or are not typical for ongoing operations. Typical examples: one-off advisory costs, above-market shareholder salaries, non-recurring restructuring.
What buyers accept
One-off, documentable items with clear justification. Against: ongoing costs the buyer would still bear. PE scrutinises add-backs critically – too aggressive adjustment harms credibility.
Documentation matters
Every add-back must be traceable. Good preparation with an M&A advisor creates transparency and strengthens seller negotiating position.