The Bigger Picture In Selling Your Business

What Does Add-Backs Mean?

Add-backs are particular business expenses that are added back to a company’s profit so as to fairly determine its true profitability.

One major legitimate way a lot of businesses minimise their tax burden is by presenting certain items as expenses on their financial statements. This practise however does not present the true profitability of a business and its valuation thereof when selling it. To determine actual profitability (especially when required for a business sale), financial statements need to be adjusted by adding them back to net income. Such adjustments are called add backs, and can include items like:

  • Owner’s compensation and benefits
  • Extraordinary or one-time expenses items

Add-backs are keenly scrutinised by the buyer given their inclusion in the profitability of the business to determine its valuation and price at sale.

« Back to Glossary Index

Contact the Firmgains Team

Explore the options available to you, improve your chances of successful sale.

Send an Email

    By submitting this form you are agreeing for us to contact you about our services. Note that all data shared with us is private and will not be shared publicly or passed on to third parties without your written consent. View our privacy policy.

    looking to acquire?

    If you’re seeking a business to buy, then we can increase your deal flow.

    Articles & Insights


    head office

    We are based in the Centre of Reading. Two minutes from the train station and just south of the river. You can reach us at the office, by phone or email during working hours from Monday to Friday.
    Click here for directions


    Fourth Floor
    Reading Bridge House
    RG1 8PR

    main phone0333 050 8225