What's the best way to push back on add-backs in a brokered deal?

October 25, 2018

by a searcher from Wake Forest University in St. Louis, MO, USA

I've been looking at some brokered deals this week where the add-backs are laughable. Anyone found the right time/manner to push back? Are you just putting your own proposal together and ignoring what they've done, or have you found some other way to be more effective at bringing reality into the conversation?

10 Likes

8 Replies

219 Views

Replies

Reply by a searcher
from University of Texas at Austin in Lexington, KY, USA

@Ryan -- what is the benefit of formalizing the EBITDA number in the LOI? My approach is to accept or reject their adjustments then add in my own and come up with a multiple that is acceptable to me and only put the offer price in the LOI. If there is a major adjustment (say $100k for a manager position) then I may call that out as a key driver for my offer price vs. asking price. I would rather have the owner just focus on the price and not an EBITDA multiple.

And adding back 100% of office expenses isn't laughable.....

Reply by a searcher
from The University of Chicago in Chicago, IL, United States

I like to create a spreadsheet showing their add backs and the ones I'm willing to accept (or add) side by side with a reason for why I'm not including that add back. I then submit that spreadsheet along with my IOI or LOI. My IOI or LOI always explicitly states the EBITDA level that I've calculated in that spreadsheet.

+6 more replies.

Join the discussion