Add-Back
Written by Christopher Krassnig - Founder - Kairos Exchange and ZenoX Media.
Published
- Checks in every memo8
- Automatic on day one3 of 8
- Read by handad spend and processor payouts
- Tracked ecom salesEUR 200M+ZenoX ad-management figures, not Kairos deal volume - Kairos hasn't closed a deal yet.
Add-Back is a cost put back onto net profit. It is added when a seller computes seller discretionary earnings. Common ones are interest, taxes, depreciation, amortization, the owner's own salary, personal costs run through the business, and a one-off cost. Each line needs a reason a buyer can check. Diligence removes any line that does not hold up. Every removed line costs its amount times the sale multiple.
Where Add-Backs Overreach
Diligence rewards an add-back schedule that survives a skeptical read and punishes one that does not. Genuine add-backs are a real one-off, like a lawsuit or a rebrand, or personal spending that truly ran through the business. Sellers overreach by calling a recurring cost a one-off, by adding back ad spend that actually drives the revenue being sold, or by treating a spouse's unpaid work as free labor. A buyer's diligence unwinds every one of those, and each unwound line comes off the price at the sale multiple, not just its own amount.
Not to Be Confused With
- Net Profit
- Net profit is the figure before any add-back is applied; an add-back is one line restored on top of it.