EBITDA add-backs, SDE statements, three years of financials, and why clean books matter more than a higher multiple.
Selling a business is the most significant financial transaction most owners will ever make. The proceeds fund retirement, family legacy, the next venture, or simply the freedom to do something different. And yet most business owners spend more time planning a vacation than planning their exit. The result is predictable: businesses that sit on the […]
Add-backs are one of the most powerful tools in a business seller’s arsenal — and one of the most abused. Done right, a properly documented add-back schedule can legitimately increase your normalized earnings by 20, 30, sometimes 50 percent above what your tax return shows. That translates directly into a higher valuation and more money […]
Your SDE statement is the most important financial document in your business sale. Not your tax return. Not your profit and loss statement. Not your balance sheet. Your SDE statement. It is the document that tells buyers, their lenders, and their advisors what your business actually earns — stripped of tax strategy, personal expenses, and […]
When a qualified buyer sits down with your three years of financials, they are not reading them the way your accountant reads them. They are not reading them the way you read them. They are reading them like a detective. They’re not looking for what’s there. They’re looking for what’s missing, what doesn’t reconcile, what […]
Ask most business owners what they want to improve before selling, and they’ll tell you they want a higher multiple. It makes sense on the surface. If your business earns $400,000 in SDE and you can get a 3.5x multiple instead of a 3.0x, that’s $200,000 more in your pocket. Who wouldn’t want that? The […]
Two businesses. Same industry. Same revenue. Same EBITDA. Same owner. Same market. One sells for $2,400,000. The other sells for $1,600,000. What’s the difference? One has 60% recurring revenue. The other earns everything from one-time projects. That $800,000 gap — on identical earnings — is the recurring revenue premium. And it’s one of the most […]