Smaller deal multiple & addbacks

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by a searcher from University of Maryland at Baltimore
in New York, NY, USA

8mos ago

Smaller deal multiple & addbacks

I'm looking at a printing company in NY state doing ~250k SDE. Most of the SDE is lifestyle add backs (owner salary + auto, computers, meals, etc). Curious if anyone has insight into appropriate multiple in this space and also how to verify some of these add-backs.

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reply by a searcher 8mos ago
from The University of Chicago in Chicago, IL, USA

I bought a business like this. You need to think through the add backs one by one. You need to see the general ledger to know. Miscellaneous “employee overage” in CIM is not an add back. I found a yoga instructor, Maui condo, and more crap in my seller’s general ledger that were real add backs. Also, sense test the margins with all add backs. If the printing biz has $600k revenue, that SDE is inflated. I’d hope your business has $1-1.3m revenue, which justifies that SDE.

reply by a lender 8mos ago
from University of Missouri in Denver, CO, USA

Many of these addbacks would be tough with sba potentially even with proof because it is difficult to determine if they are personal or business expenses. I'm happy to discuss this further