Listing 73190

This article explains the concept of 'add-backs' in business sales, a crucial element for determining a business's true net income. It details how sellers often adjust their reported income for tax purposes, and how these adjustments (add-backs) are then used to present a higher profit figure when selling. An example of an auto repair shop in California illustrates how personal expenses and non-essential salaries can be identified as add-backs. The text emphasizes the importance of a business broker in recasting financial statements to reveal the adjusted net income and advises buyers to conduct thorough due diligence by questioning all listed expenses. It notes that most small business owners have add-backs, and buyers should focus on satisfactory explanations rather than avoiding businesses with them.