{
  "title": "What are add-backs? Definition, formula and example",
  "url": "https://acquisitions.com/blog/what-are-add-backs/",
  "author": "Moran Pober",
  "publisher": "Acquisitions.com",
  "published": "2026-10-22",
  "updated": "2026-10-22",
  "section": "Glossary",
  "keyword": "Add-backs",
  "short_answer": "Add-backs are expenses on a business's books that are added back to profit when valuing it, because a new owner would not have to pay them. They include the owner's salary and perks, one-time costs, and non-cash charges. An add-back must be provable with documents and must truly not recur.",
  "facts": {
    "Owner's salary (one working owner)": [
      "$85,000",
      "Yes",
      "Standard for SDE; buyer replaces the owner"
    ],
    "Owner's health insurance": [
      "$14,000",
      "Yes",
      "Personal benefit, documented"
    ],
    "Depreciation and amortization": [
      "$22,000",
      "Yes",
      "Non-cash charge"
    ],
    "Interest on owner's loans": [
      "$9,000",
      "Yes",
      "New owner finances differently"
    ],
    "One-time roof repair after a storm": [
      "$18,000",
      "Yes, with invoice",
      "Non-recurring"
    ],
    "Owner's spouse on payroll, does the books": [
      "$30,000",
      "Disputed",
      "Someone must still do the books"
    ],
    "\"Marketing we stopped\"": [
      "$15,000",
      "Disputed",
      "Revenue may fall without it"
    ],
    "Annual bad-debt write-offs": [
      "$12,000",
      "No",
      "Happens every year"
    ],
    "Accepted total": [
      "$148,000",
      "",
      "Net profit $120,000 + $148,000 = SDE $268,000"
    ]
  },
  "sources": [
    "https://www.sba.gov/funding-programs/loans/7a-loans",
    "https://www.irs.gov/forms-pubs/about-form-8594"
  ],
  "license": "Facts may be quoted with attribution to Acquisitions.com and a link to the url above."
}