The dumbest addback I've ever seen.

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June 03, 2026

by a professional from Harvard University - Harvard Business School in Atlanta, GA, USA

A marketing company. 20 years in business. Their entire line of work is digital marketing. The deal: $1M EBITDA. $600K reported, $400K in addbacks. I see a line item: "Marketing mistake." I call the broker. "What's this?" "They tried three strategies that didn't get the ROI they wanted. They shut them down. So they want to add that back." Let me explain why this is insane. If the experts — running a marketing company — put money on the table to test something and it didn't work, you think you'll be better at picking winners? At minimum, you'll have the same testing costs. More likely, two to three times more. See how this crazy addback impacted the deal: https://youtu.be/qmohIfi0OcY
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Reply by an investor
in Marco Island, FL 34145, USA
I guess the seller can add back anything they want but it doesn't mean the buyer is going to accept it. If the seller wants to "add back" that loss, they should wait three years to sell the business and show three years of income statements without the loss.
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