The buyer’s accounting firm is trying to add back our operational AI investment expenses to normal cash flow rather than capitalizing them, lowering our EBITDA. How do we fight these adjustments?

Question

Tyler Smith · Accepted Answer

Buyers will look for any excuse to treat growth investments as standard operating expenses to artificially lower your trailing twelve months EBITDA. If you spent significant capital building automated AI workflows and proprietary integration tools, those are capital expenditures designed to drive long-term productivity, not routine daily operating costs.

To fight these negative adjustments, you must present a detailed, audited breakdown of these technology investments. Show how these expenditures directly correspond to structural, long-term labor savings. Prove that by investing in these automated workflows, your revenue per employee has scaled, which will benefit the buyer for years to come.

Tie this back to your operational framework. Show the buyer your V/TO® and how these technological developments were prioritized as major strategic Rocks. Use a professional Quality of Earnings analysis to officially capitalize these investments under standard accounting principles. By demonstrating that these AI tools are proprietary operational assets that drive permanent margin expansion, you can defend your true normalized EBITDA and secure the premium multiple your tech-enabled operations deserve.