Get Adjusted: Making the Most of your Bottom Line

Previously posted in Inc by Andrew Silver

Here are 7 common add backs that can boost your (earnings before interest, taxes depreciation and amortization)  EBITDA and company value:

Owner’s salary and compensation–usually the largest single add back item. However, even if you’re retiring, someone will have to lead the company and be paid a fair salary. Therefore, salaries can’t be eliminated entirely. Many private company owners often take home more than a “market rate” salary and the bottom line should be adjusted to add back compensation in excess of the market rate, or what it would cost to hire a successor.

Salaries and bonuses paid to relative–if they will not continue working for the company post-transaction they should be added back.

Personal travel–that is commonly linked to business travel.

Vehicles– if not used primarily for business purposes.

Life insurance premiums and other fringe benefits–provided for the owner or their family members.

Read full article via Get Adjusted: Making the Most of your Bottom Line | Inc.com.

 

About

Jim Woods is president of The Jim Woods Group. A management consulting firm. Go here to see his work www.jimwoodsgroup.com. He advises and speaks to organizations large and small on how to increase top line growth in times of uncertainty and complexity. Some of his speaking and consulting clients include: U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. See more at his website www.jimwoodsgroup.com.

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Posted in Small Business

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