Funniest EBITDA adjustment... Go

dino3253's picture
Rank: Monkey | banana points 31

Pro-forma run-rate bank NTM EBITDA - included a ramping unit adjustment and weather adjustment

Any others?

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Comments (22)

Dec 14, 2018

Damn, you're quips haven't been too great as of late. You doing alright buddy?

Funniest
Dec 14, 2018

Accounting finals probably lol

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Dec 14, 2018

Back on the small business side anytime I saw the QuickBooks "Ask My Accountant" line I would laugh a little

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Dec 14, 2018

Single owner business ran all his lifestyle expenses through the company. EBITDA adjustment of "take this guy's business credit card away"

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Dec 14, 2018

WeWork's community-adjusted EBITDA where they add back every cost up to gross profit and so they have the same gross profit and EBITDA margin...BSD move for sure

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Most Helpful
Dec 14, 2018

Don't think I've ever seen a "funny" adjustment, but I've seen plenty that are so blatantly ridiculous that they're funny.
These are all from the same company, and they took so much offense to us disagreeing with them: Added back the salaries of 3 salespersons for their first 4-6 months until they brought enough sales to cover their salary. Add back for an advertising campaign because it wasn't as successful as they had hoped. Add back for SEO costs since they don't no longer need to b/c HomeDepot covers it somehow now. The largest adjustment was an add back to adjust for the exorbitant shipping costs they had been incurring to get their product in from China faster to meet up with a spike in demand, which made it so that they lost money on those sales -- of course they only want to adjust for the expense rather than the sales they wouldn't have gotten if they didn't expedite.

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Dec 17, 2018

lmao, add back COGs because "we'd have more money if we didn't pay for all this shit"

    • 3
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Dec 15, 2018

Work for a lower a lower middle market m&a advisory firm, I've seen seven figure owner comp that takes up more than half of EBITDA for a few companies, excluding "owner benefits"

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Dec 16, 2018

What's funny or unusual about that? A lot of guys zero out when cash can't really be used that effectively within the business and usually replacing the founder with a CEO is less expensive for the co so it's a fair add back?

Dec 15, 2018

Back in the 2010 timeframe I encountered an addback for "Deep Economic Recession," which more than doubled EBITDA. The argument was that if we weren't in the middle of an economic crisis, the company would be making twice as much money. Same guy wanted to get paid a multiple of cash flow PLUS total asset/NWC value.

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Dec 15, 2018

Saw a hurricane adjusted EBITDA

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Dec 15, 2018

This is standard for retail / restaurant stores

Dec 15, 2018

I see weather and owner "comp/ benefits/ private jet" adjustments very often... the latter always seem to fall under "extraordinary non-recurring" definition even though weather events are recurring by nature.

One of the better ones I saw recently was an addback for increased volume from having factories running on holidays and weekends. Owner was very religious and observed a ton of holidays. That's great and all, but can that extra volume be sold?!

Dec 15, 2018

Not illegitimate in the sense that a PE or strategic wouldn't apply the addback but ridiculous in the sense that the owner was very frivolous in his spending. We added back flights, fancy hotel stays, dinners, etc. that he spend on his management team. Keep in mind that the company was international and in many cases the owner would fly management from HQ that was in a different country just for a brief conversation/ note taking before he would fly them back... As you could guess the company had a liquidity problem and was boarder line distressed.

Dec 16, 2018

Saw an adjustment for "additional cost savings" which was basically if they were bigger, then they would reap cost benefits through more scale. Not funny, but kinda ridiculous to expect the buyer to pay for that by applying a multiple to a higher $ amount.

Dec 17, 2018

I swear this is true.

Sell-side engagement on a negative cash flowing company. Our CIM doesn't show a single negative cash flow number throughout. Queue PE company coming in and putting forth a bid for a "turnaround" asset that is already turning a corner (supposedly). We get under LOI and make it a month into diligence when a partner literally says to us on a diligence call "Wait... (5 second pause) you aren't trending towards $[x]M of EBITDA?! You are still negative cash flow?!?!" after our client ceremoniously read out last three months performance. We were an entire fucking month under LOI at this point. This was like runrate, stabilized, pro forma, next two years performance we were showing lmao. The partner hops off the phone and calls my MD directly on his cell, which means only one thing to you folks familiar with that move haha. Most hilarious thing I've ever heard on a conference call though.

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Feb 27, 2019

SMH

Dec 17, 2018

warm weather adjustment

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Dec 17, 2018

"Future Cost Savings" is always a good one.

Dec 17, 2018

Not necessarily funny, but an interesting adjustment.

Looked at a deal ~4/5 years ago for a large retail chain in the midwest. In addition to tons of other things, they sell firearms and ammunition. They had to adjust historical numbers down because they sold so many firearms prior to Obama getting re-elected that it created this crazy spike in earnings.

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Feb 28, 2019
Mar 9, 2019