We run a lean, automated business, but the buyer's broker is refusing to add back our personal travel, redundant software licenses, and non-recurring R&D expenses to our EBITDA. How do we structure our EBITDA recasting to force them to recognize our true operating cash flow?

Question

Tyler Smith · Accepted Answer

A buyer's broker will always try to minimize your EBITDA adjustments to keep the purchase price down. However, any expense that will not continue post-close must be added back to your earnings. If you do not fight for these recasting adjustments, you are leaving money on the table at a multiple of every dollar you ignore.

To win this argument, you must move beyond verbal debates and present an undeniable, audit-ready recasting schedule. Under IVS 105, the Income Approach relies on normalized cash flows. You must prove that these expenses are truly non-operating or discretionary.

For personal travel and owner perks, present clean tax records and expense reports that clearly separate owner lifestyle expenses from core operational costs.

For redundant software licenses, map your technology stack directly to your EOS Accountability Chart. Show how your recent AI integrations have made those legacy software packages obsolete. Explain that while the cash was spent historically, the contracts have been terminated and the cost is gone.

For non-recurring R&D, present the project timelines and deliverables to show the development phase is complete.

If the broker remains defensive, use the Trust Equation to rebuild alignment. Offer to leave a small working capital buffer or structure a brief post-close verification period. This shows you are confident in your numbers. Normalizing your EBITDA is not about creative accounting; it is about proving the true, repeatable earning power of your operating system.