Hear in detail all about add-backs in M&A for IT Services. This week, CEO Mike Harvath and VP of Growth, Ryan Barnett discuss add-backs: what they are, why they matter, types of legitimate add-backs, and how they will affect your business post-transaction.
When Revenue Rocket engages in a buy or sell-side M&A transaction, one of the most asked about topics is add-backs. An add-back is essentially an add-back to the profit of an expense that won’t occur after an M&A transaction is complete. Whether you’re a buyer or a seller, it’s essential to understand what these expenses are and how they impact the business. In turn, you’ll know what kind of valid profit contribution you can expect. You’ll also want to know when to throw out an adjustment when it’s an ongoing expense, or even dig in when an add back brings up costs that make you question the overall health of the business.
Below is a list of some of the add-back categories discussed in this episode:
Please note: Keep in mind, we are discussing this to help enhance valuations. Please consult your accountants and lawyers for financial legal advice.