We run several personal expenses and a highly discretionary marketing budget through our business, which we plan to add back to our EBITDA. How do we track these adjustments transparently during our runway so the buyer does not accuse us of cooking the books?

Question

Tyler Smith · Accepted Answer

Buyers look at historical financials with a forensic lens, and they will carefully audit any personal or discretionary expenses you plan to add back to your EBITDA. To ensure these adjustments are accepted without dispute, you must track them with absolute transparency during your runway. Do not rely on a messy spreadsheet compiled at the last minute. Instead, create a dedicated system to log every single discretionary expense, such as personal vehicles, travel, or owner-discretionary marketing campaigns. Map these expenses clearly to your weekly Scorecard metrics and your general ledger. This transparency proves to the buyer's forensic accountants that these costs are truly non-operational and can be easily removed without hurting the ongoing business. Keep these financial discussions out of your weekly Level 10 Meetings to prevent confusing your leadership team. Your team must remain focused on operational execution and standard profitability goals. By maintaining clean, verifiable records of your add-backs during your entire exit runway, you build massive credibility with the buyer. When your adjustments are backed by consistent data and clear accounting logic, you prevent the buyer from using these expenses as an excuse to chip away at your valuation.