Add backs to calculate SDE - apply a haircut?

March 19, 2020
by a searcher in Los Angeles, CA, USA
I am reviewing a P&L where the owner has considerable add-backs to calculate his SDE. Is there a general rule to apply a haircut to these personal expenses (especially when considering an SBA loan)? For due diligence (if it gets to that), I will probably ask for detailed records to prove these are truly personal expenses....any other thoughts/tips/suggestions?
from Villanova University in New York, NY, USA
Also, a Seller might pay their credit cards every other month. In this case, the cash payment that hit the P&L is not in the period in which the expense was incurred ("last month"). So be careful of timing too. It could easily impact your ultimate addback amount. I would be happy to discuss further if you'd like.
from Michigan State University in Newport Beach, CA, USA