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EBITDA Add-Backs
Last Updated: Jun 7, 2019
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EBITDA add-backs are amounts for specific expenditures that the borrower adds to EBITDA to come to Adjusted EBITDA.
These add-backs are highly negotiated terms, as EBITDA is a key tool for a company’s valuation. Common add-backs include gains or losses from discontinued operations, unusual or nonrecurring events, restructuring expenses, and non-cash items. Often add-backs are permitted only for a specific and limited period of time. While EBITDA add-backs have the stated purpose of “normalizing” or “adjusting” EBITDA to account for certain non-recurring or extraordinary expenses, there is also the danger of add-backs resulting in inflated EBITDA.