How do lenders see recast financials?

December 16, 2024
by a searcher in Chicago, IL, USA
I am speaking with the sellers of a Auto-Service center who have presented solid financials but they prepaid expenses and purchased
additional inventory as a tax avoidance strategy. They have kept updated documents as evidence of this and are saying that the prepaid expenses and additional inventory should be added to EBITDA. Essentially they are saying that the financials can be recast to show the true profitability. I do believe they are being honest based on the documents they have provided. The expenses were paid long in advance and the inventory is more than what they need.
Is this standard practice to recast financials to show the "true EBITDA", and how do banks/lenders generally look at it? Thank you.
in Ponte Vedra Beach, FL 32082, USA
from University of Toronto in Toronto, ON, Canada