The QofE auditor is rejecting our add-back of several owner-related travel and marketing expenses because they claim these are essential for customer retention. How do we prove these expenses are truly discretionary and restore them to our adjusted EBITDA?

Question

Tyler Smith · Accepted Answer

Quality of Earnings auditors are paid to find reasons to slash your adjusted EBITDA. One of their favorite targets is owner discretionary expenses, specifically travel and marketing. They will argue that because these activities led to sales, they are necessary operating expenses that must remain on the books.

To defeat this, you must provide empirical evidence that the business operates independently of your personal touch. Show them your Accountability Chart™ to prove that a dedicated sales leader or marketing manager is responsible for customer retention, not you.

Present data from your CRM showing that key accounts are managed by your team and that your personal travel was for high-level networking, not daily account maintenance. If the marketing expenses were for speculative, one-off projects that have already been shut down, show the termination dates and the lack of ongoing operational impact.

In your weekly Level 10 Meeting™, you track metrics that prove your systems drive revenue, not your personal expense account. By proving that the business would continue to thrive under new ownership without these expenditures, you force the auditor to accept them as legitimate add-backs, preserving your EBITDA and your multiple.