SBA/Ebitda questions

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by a searcher from Le Moyne College
in Atlanta, GA, USA

6mos ago

SBA/Ebitda questions

Hey all - negotiating a purchase now with a service business that hasn’t optimized his ebitda for valuation but for tax minimization. We know the cash flow is much higher than what sba can verify on tax returns. How is this usually handled? Are we able to buy for the higher price?

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reply by a professional 6mos ago
from Vanderbilt University in Nashville, TN, USA

I actually wrote something about this that might be helpful, but the real answer is what everyone else touched on - getting some kind of accounting report (quality of earnings or cash proof) that tells you what the company is actually making on a normalized basis. The last two articles here might be helpful: redacted

reply by a lender 6mos ago
from University of Missouri in Denver, CO, USA

A QofE can help take some of the addback verification off the bank. Typically, a bank is always going to be much more conservative than the sellers. I always say the onus is on the seller to make it clear and obvious this is a one-time expense or non-business expense. ^redacted‌