Has anyone seen management add-back charitable donations to EBITDA?

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February 24, 2023

by a searcher from London Business School in London, UK

I'm looking at an IM where management / brokers have chosen to present EBITDA including an add-back for past (and future) charitable donations.
I'd be interested in perspectives on whether folks have seen this previously.... ?
Thanks!

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Reply by a searcher
from University of Pennsylvania in New Haven, CT, USA
Have seen this many times and thought it might helpful to put examples to the points made above. Most clearly acceptable was an add-back from an owner who was an avid NASCAR fan and contributed to an amateur racing league, completely unrelated to his business. Most clearly unacceptable was a property service business owner's add-back of a contribution to the charity of a developer, which became a client in the same year of the donation. Middle case was from a home services company to a local youth sports league, which we ended up partially accepting (but I imagine others might advocate for a full dismissal).
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Reply by a searcher
from Ivey Business School at Western University in Toronto, ON, Canada
I often saw this when I worked in FDD. We pushed back a few times for reasons noted above; the donations provided for marketing opportunities, customers/suppliers expected the donations as part of standard community involvement, etc. I would lean towards continuing to make certain donations post-close as you’re running your succession plan to keep any relevant relationships warm
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