How to think about addbacks

I saw one business recently that was trying to add back in marketing expenses. Another one tried to add back in necessary operational travel. I figure if the expense is going to be there after a sale then it shouldn't be an add back. I have found that depending the add backs can have a very large impact on the valuation of the company.

I've worked with hundreds of buyers over the years and add-backs are always an issue, especially the personal expense ones. When they're outrageous it's, "If they'll lie to the IRS will they lie to me?" You must put in a fair market salary for running the business, you must allow for cap ex, and allow for operating interest (not acquisition interest). Good bankers, like ^Lisa Forrest, will often discount the fringe add-backs like personal travel, etc.. And, amortization is usually legitimate. It sure is nice when when the financial statements are a true reflection of the business' earnings.