Making adjustments for S Corp that owner ensured reported losses annually

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by a searcher from Harvard University - Harvard Business School
in Boston, MA, USA

2yrs ago

Making adjustments for S Corp that owner ensured reported losses annually

I'm looking at a company in an industry attractive to me. The company has a great reputation and differentiated products. However, it's an S Corp and the owner has ensured they report a loss nearly every year. Does anyone have advice on where to start to get a clearer picture of what margins should be? Do I have to get the Quickbooks and go line by line here?

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reply by an investor 2yrs ago
from Harvard University in Santa Fe, NM, USA

I would ask for a schedule of proposed EBITDA addbacks (i.e., extraordinary and/or non-recurring expenses) and try to validate those

reply by a searcher 2yrs ago
from Harvard University in Boston, MA, USA

Thanks John. I ended up simply asking him to break down each line of his expenses by discretionary vs. not and then I will have to validate it.