Other Income in P&L

searcher profile

August 25, 2023

by a searcher from Southwest Texas State University in Dallas, TX, USA

Interested to know others experience with seller having a significant, up to 10% of revenue included in EBITA? Seems the seller is inclined to believe that all of it should be considered in the companies multiple.

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
If you are referring to "Other Income" either in the top line revenue or in the bottom line adjustments, from a lending perspective "Other Income" is usually removed unless it can be proven to be something that is a repeatable service that the company provides. If it is interest income, grant income, gain or loss on the sale of an asset, it is usually removed from an adjusted EBITDA perspective. I think you need to get your arms around exactly what it is and find out if it is something that will be recurring. If not, it should be removed from EBITDA.
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Reply by an intermediary
from Massachusetts Institute of Technology in Houston, TX, USA
I agree with what the others have said so far. Additionally, if it is recurring, is it actually core to the business? If it is, then why isn't it being classified as normal revenue? In that case, it sounds to me like either poor bookkeeping or the seller is trying to obscure something.

Are you having a QoE done? This is exactly the type of thing that would identify and assess, and provide you with "professional" backup in negotiations with the seller.
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