Claims to verify · Before you buy
How to verify seller add-backs without a finance degree
Published · Reviewed by The Diligence Standard Team · Updated
An add-back needs evidence that the expense occurred, appears in the reported earnings and will not continue for a typical buyer. Personal, one-time and discretionary are explanations, not proof.
A realistic transaction story
A dental laboratory added back consulting fees paid to the owner’s brother. Invoices showed that he maintained the scheduling software and handled urgent client support. The relationship could end, but the work could not disappear.
What the evidence changed
The payment was related-party, yet a replacement cost remained in the business.
What to check
- Write down the exact claim and who supplied it.
- Ask what was independently tested, by whom and under what scope.
- For every adjustment, confirm the ledger entry, supporting record, business purpose and realistic post-close replacement cost.
- Translate any unresolved gap into cash, price, terms, timing or a decision not to proceed.