The Do’s and Don’ts of Add backs!
(Knowing what to fight for)
Our BIG disclaimer!
The following examples are how current lenders/underwriters view
add backs when being considered in their cash flow analysis. These
are views compiled by Diamond Financial but are not opinions made
by Diamond Financial. Many of the current, aggressive lenders were
included in these compilations.
Unlike some lenders, the lenders we use only
make money by approving and closing loans as
opposed to being paid for reviewing them and
securing banking deposits. We live where you
live, we only make money by funding deals.
Know who’s on your side when
truly evaluating your lending options.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
Rental Income
$
$
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
Not buyer specific
Owner's personal cell phones
2
3
4
Commissions
Depreciation
$
$
740.00
27,461.00
$
$
27,461.00
Non-Cash Event
5
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
Leased Equipment
Lodging & Travel
$
$
10,067.00
3,297.00
$
$
10,067.00
3,297.00
Meals & Ent.
Office Supplies
$
$
1,239.00
4,830.00
$
$
1,239.00
Outside Services
Permits & Licenses
Professional Fees
$
$
$
401.00
533.00
2,319.00
$
$
$
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
271,233.00
618,659.00
-
Expenses
6
7
8
9
10
11
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
14
15
$ 189,354.00
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it
warrant any assumptions as true and correct.The Seller agrees this information and additional documentation will be made avai lable by this office or the Seller
upon acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a pros pect or his Broker, whether a
Buyer/Broker or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
0
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Gross Sales
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
$ 43,500.00
Personal home Items
1
Discountinued Advertising
Cost of Goods
$ 271,233.00
Gross Profit
$
Other Income
Rental Income
$
$
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Amortization
$
3,487.00
$
3,487.00
Not buyer specific
Cell Phones
$
2,247.00
$
2,247.00
Owner's personal cell phones
2
3
4
Commissions
Depreciation
$
$
740.00
27,461.00
$
$
27,461.00
Non-Cash Event
5
Dues & Subscriptions
$
106.00
$
Insurance
$
32,745.00
$
12,000.00
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
Leased Equipment
Lodging & Travel
Meals & Ent.
$
$
$
10,067.00
3,297.00
1,239.00
$
$
$
10,067.00
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
618,659.00
-
Expenses
-
6
7
8
9
10
11
Family health insurance
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker
or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
14
15
0
Cost of Good Sold
Item #1
Personal home items– This category is NEVER an add back and
here’s why:
•
1) The IRS considers this as the “Cost of Goods Sold” and
only the cost of “GOODS” sold to produce the revenues
stated above.
•
2) The more you prove there are additional items in this
number, the more you prove the seller is dishonestly
submitting his tax return information to the federal
government—We NEVER want to do this.
•
3) Proving the actual amount of items utilized in the
business operations is usually very difficult.
Stay away from this one understanding what you could be
exposing on the sellers side.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
271,233.00
618,659.00
43,500.00
Expenses
Advertising
$
22,394.00
$ 20,105.00
Discountinued Advertising
2
Amortization
$
3,487.00
$
3,487.00
Not buyer specific
Cell Phones
$
2,247.00
$
2,247.00
Owner's personal cell phones
3
4
Commissions
Depreciation
$
$
740.00
27,461.00
$
$
27,461.00
Non-Cash Event
5
Dues & Subscriptions
$
106.00
$
Insurance
$
32,745.00
$
12,000.00
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
Leased Equipment
Lodging & Travel
Meals & Ent.
$
$
$
10,067.00
3,297.00
1,239.00
$
$
$
10,067.00
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
-
6
7
8
9
10
11
Family health insurance
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant any
assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon acceptance of
an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker or Transaction
Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
14
15
0
Discontinued Advertising
Item #2
Discontinued Advertising is “typically” not considered an add back
and here’s why:
•
1) No one can prove or disprove the actual effects that this
advertising had/has or will have on sales. Customers may have
seen the ad many times (the 9 rule) and have not chosen to call
until they needed the actual service your client provides and
then finding a phone number online as opposed to the method
of advertising.
•
2) May be considered if the cost was for an item such as
sponsoring a children’s baseball team and most of the
businesses clients come from other states, as an example.
•
3) If the advertising add back was for additional years then it
brings into question the lack of management skills the seller
possess if in fact this is an add back. Meaning, if the seller
unwisely ran the business over the last three years and spent
money on unproductive items.
Depending on the amount, not typically worth fighting for.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
Discountinued Advertising
2
Not buyer specific
3
Owner's personal cell phones
4
Non-Cash Event
5
271,233.00
618,659.00
618,659.00
Expenses
Advertising
$
22,394.00
$
20,105.00
Amortization
$
3,487.00
$
3,487.00
Cell Phones
$
2,247.00
$
2,247.00
Commissions
Depreciation
$
$
740.00
27,461.00
$
$
Dues & Subscriptions
$
106.00
$
Insurance
$
32,745.00
$
12,000.00
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
Leased Equipment
Lodging & Travel
Meals & Ent.
$
$
$
10,067.00
3,297.00
1,239.00
$
$
$
10,067.00
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
27,461.00
-
6
7
8
9
10
11
Family health insurance
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker
or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
14
15
0
Amortization
Item #3
Amortization is “typically” considered an add back and here’s
why:
•
1) Seller specific loans, leases and other financing products
used to secure the business are typically being paid off or
secured by the seller only and are not being assumed by the
buyer.
•
2) Items to be aware of in this category are any bank charges
for credit card processing that may continue, leases on
vehicles, equipment or other assets being assumed by the
buyer and NOT being paid off prior to closing.
•
3) We will deduct for our buyers financing considerations
after determining the total SDE for the business and at a
later point.
Almost always an add back excepted by all lenders!
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
$
3,487.00
$
3,487.00
Not buyer specific
2
3
271,233.00
618,659.00
Expenses
Cell Phones
$
$ 2,247.00
Owner's personal cell phones
4
Commissions
Depreciation
$
$
2,247.00
740.00
27,461.00
$
$
Non-Cash Event
5
Dues & Subscriptions
$
106.00
$
Insurance
$
32,745.00
$
12,000.00
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
Leased Equipment
Lodging & Travel
Meals & Ent.
$
$
$
10,067.00
3,297.00
1,239.00
$
$
$
10,067.00
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
27,461.00
-
6
7
8
9
10
11
Family health insurance
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker
or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
14
15
0
Personal Cell Phone
Item # 4
Personal cell phones are NOT “typically” considered an add back
and here’s why:
•
1) In all reality, do you truly believe the buyer will not posses
a cell phone? Or consider his bill as a company expense?
•
2) Think about the business and the cell phone actual usage.
Do they have any staff they contact on their cell phone? Is
the seller out of the office at all and uses the phone to
conduct any business?
•
3) We could possibly prove this by reviewing the last six
months of calls for the seller and showing that his cell phone
was not in any way used to conduct or contact his business.
Chances are, we should let this one go.
•
4) We can also consider family members that do not work in
the business that are supplied cell phones.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
Dues & Subscriptions
$
106.00
$
Insurance
$
32,745.00
$
12,000.00
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
Leased Equipment
Lodging & Travel
Meals & Ent.
$
$
$
10,067.00
3,297.00
1,239.00
$
$
$
10,067.00
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
$ 27,461.00
Non-Cash Event
5
-
6
7
8
9
10
11
Family health insurance
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker
or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
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Depreciation
Item # 5
Depreciation is “typically” considered an add back and here’s
why:
•
1) It’s a non-cash event that allows for the deduction of
revenue as reported to the IRS for tax purposes.
•
2) Any concern on this item will be related to the “Actual
Usable Life” of the equipment or assets being depreciated.
•
3) We typically add this back and look for the underwriters
guidance on any changes to this.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
Dues & Subscriptions
$
106.00
$
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
27,461.00
Non-Cash Event
5
6
-
Insurance
$
32,745.00
$ 12,000.00
Family health insurance
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
Not buyer specific
Owner's wife's personal car lease
Leased Equipment
Lodging & Travel
Meals & Ent.
$
$
$
10,067.00
3,297.00
1,239.00
$
$
$
10,067.00
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
7
8
9
10
11
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant any
assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon acceptance
of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Brok er, whether a Buyer/Broker or
Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
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Family Health Insurance
Item # 6
Health insurance for family members is “typically” considered
an add back and here’s why:
•
1) If it is provided to the seller’s family members that are
either leaving the business after the closing, or not working
in the business currently.
•
2) NEW CONCERN Current lending guidelines now look at
the seller’s personal health insurance as a required cost of
doing business and MAY NOT be considered an add back
unless your buyer can prove he currently has benefits and
that they will continue (possibly through a spouse’s job).
•
3) Leaving the buyer with no health insurance is no longer
an option if the seller is paying his out of the business cash
flow.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
5
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
6
Interest
$
8,899.00
$ 8,899.00
Not buyer specific
7
Lease Van
$
5,940.00
$
2,841.00
Owner's wife's personal car lease
Leased Equipment
Lodging & Travel
Meals & Ent.
$
$
$
10,067.00
3,297.00
1,239.00
$
$
$
10,067.00
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
8
9
10
11
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker
or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
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Interest Expense
Item # 7
Interest is “typically” considered an add back and here’s why:
•
1) Seller specific loans, leases and other financing products
used to secure the business are typically being paid off or
secured by the seller only and are not being assumed by the
buyer.
•
2) Items to be aware of in this category are any bank charges
for credit card processing that may continue, leases on
vehicles, equipment or other assets being assumed by the
buyer and NOT being paid off prior to closing.
•
3) We will deduct for our buyers financing considerations
after determining the total SDE for the business and at a
later point.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
5
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
$
8,899.00
$
8,899.00
6
7
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
Not buyer specific
Lease Van
$
5,940.00
$
2,841.00
Leased Equipment
Lodging & Travel
Meals & Ent.
$
$
$
10,067.00
3,297.00
1,239.00
$
$
$
10,067.00
3,297.00
1,239.00
Owner's wife's personal car lease
8
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
9
10
11
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant any
assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon acceptance
of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Brok er, whether a Buyer/Broker or
Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
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Wife’s Personal Vehicle
Item # 8
Personal Vehicle’s are “typically” considered an add back and
here’s why:
•
1) When considering this add back an underwriter looks at
whether this vehicle is used for the business and by the
business to produce the gross revenues as reported. If this
vehicle is not critical to sales then it is usually considered an
add back.
•
2) What is NO LONGER accepted as an add back by lenders
as of 2012 are costs related to vehicles. Meaning: Fuel and
repairs are NO longer accepted as add backs as proving
them is very difficult.
•
3) We can ONLY add back actual “Lease or loan payments”
on that vehicle providing we have proof that the payments
were being paid from the business accounts.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
5
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
6
7
8
Leased Equipment $
10,067.00
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
Not buyer specific
Owner's wife's personal car lease
$ 10,067.00
One time equipment lease
Lodging & Travel
Meals & Ent.
$
$
3,297.00
1,239.00
$
$
Owner's personal
Owner's personal
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
3,297.00
1,239.00
9
10
11
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant any
assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon acceptance
of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Brok er, whether a Buyer/Broker or
Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
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Lease Payments
Item # 9
Lease payments Are “typically” considered an add back and
here’s why:
•
1) If it is equipment that the seller will be paying off at the
closing then this expense will not be realized in future costs.
•
2) The only concern on this item will be related to the
assuming of these leases that WILL continue to the buyer.
•
3) If at closing we are acquiring the business assets free and
clear of liens and encumbrances then we should always
explore all prior years relevant to determine any additional
lease payment add backs.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
5
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
Leased Equipment
$
$
$
8,899.00
5,940.00
10,067.00
$
$
$
8,899.00
2,841.00
10,067.00
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
6
7
8
9
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
Lodging & Travel
$
3,297.00
$
3,297.00
Meals & Ent.
$
1,239.00
$
1,239.00
Owner's personal
10
Owner's personal
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
11
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker
or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
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Lodging and travel
Item # 10
Lodging and Travel is NOT “typically” considered an add back
and here’s why:
•
1) It is very difficult to determine what part of travel is
required as almost all business show some travel as an
expense.
•
2) In regard to lodging and adding it back. The question will
be asked if there is any ongoing training in any way for the
owners or staff, most businesses have some and if that’s the
case, proving this one gets tougher.
•
3) This is usually a small number and trying to prove this is
not typically worth it.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
Leased Equipment
$
$
$
8,899.00
5,940.00
10,067.00
$
$
$
8,899.00
2,841.00
10,067.00
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Lodging & Travel
$
3,297.00
$
3,297.00
Meals & Ent.
$
1,239.00
$
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
5
Owner's personal
6
7
8
9
10
Owner's personal
11
-
-
12
13
Owners Salary
Owners MS Training
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant any
assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon acceptance
of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Brok er, whether a Buyer/Broker or
Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
14
15
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Meals and Entertainment
Item # 11
Meals and Entertainment is NOT “typically” considered an add
back and here’s why:
•
1) It is understood that owners typically dine out and
expense the meal through this category, BUT some meals
are with business acquaintances, employees, clients or
persons that have some relation to the business.
Determining which ones do and do not is just not possible
from a lenders perspective.
•
2) Also included many times are office lunches, meeting
food and drink and other ongoing legitimate business
expenses. Actually separating these and claiming the new
owner will have none is difficult.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
Leased Equipment
$
$
$
8,899.00
5,940.00
10,067.00
$
$
$
8,899.00
2,841.00
10,067.00
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Lodging & Travel
Meals & Ent.
$
$
3,297.00
1,239.00
$
$
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
$
246,858.00
$
-
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
5
6
7
8
9
10
11
Owner's personal
Owner's personal
-
-
Salaries/Officers
$
46,688.00
$ 46,688.00
Owners Salary
12
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
Owners MS Training
-
13
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
1,150.00
-
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker
or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
14
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Officer Salary
Item # 12
Officer Salary is “typically” considered an add back and here’s
why:
•
1) It’s specific to the seller and the buyer will require his
own.
•
2) Any concern on this item will be related to multiple
officers and the job positions and contributions of each. It is
difficult to explain that one buyer will replace 3 officers with
just himself unless we show that 2 of the officers are silent
partners NOT working in the business and possibly even
show they are employed elsewhere.
•
3) We will adjust for a buyer specific amount which will
cover personal living expenses.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
Leased Equipment
$
$
$
8,899.00
5,940.00
10,067.00
$
$
$
8,899.00
2,841.00
10,067.00
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Lodging & Travel
Meals & Ent.
$
$
3,297.00
1,239.00
$
$
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
5
6
7
8
9
10
11
Owner's personal
Owner's personal
-
46,688.00
Owners Salary
12
Owners MS Training
13
Education and Training
$
1,150.00
$ 1,150.00
Small Tools
$
3,301.00
$
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
$
5,688.00
Owner's personal truck
$
189,354.00
-
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a
Buyer/Broker or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
14
15
0
Education and Training
Item # 13
Education and Training are NOT “typically” considered an add
back and here’s why:
•
1) If any training is required at all for staff members then this
will never be considered. In this case it appears that the
software training was done by the seller himself and will
have to continue for the buyer or a staff member in the
future.
•
2) If staff training is required and it is out of town then the
lender will explore all expenses relating to travel and lodging
while understanding the training expense.
•
3) Exceptions may be that the buyer has all training required
to operate this business and it is possible to consider this
expense an add back BUT may not be worth the
documentation required.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
Leased Equipment
$
$
$
8,899.00
5,940.00
10,067.00
$
$
$
8,899.00
2,841.00
10,067.00
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Lodging & Travel
Meals & Ent.
$
$
3,297.00
1,239.00
$
$
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
$
1,548.00
$
Utilities
$
6,854.00
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
189,354.00
309,026.00
271,233.00
618,659.00
Expenses
Not buyer specific
Owner's personal cell phones
-
5
6
7
8
9
10
11
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
$ 685.00
Personal Home Utilities
14
$
Owner's personal truck
15
5,688.00
$ 189,354.00
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it
warrant any assumptions as true and correct.The Seller agrees this information and additional documentation will be made avai lable by this office or the Seller
upon acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a pros pect or his Broker, whether a
Buyer/Broker or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
0
Personal Home Utilities
Item # 14
Home Utilities are “typically” considered an add back and here’s
why:
•
1) If and only if the seller is also writing off a home office
that the lender deems unnecessary to operate this business.
•
2) If the entire business is being operated out of his home
and he is trying to add back the utilities and office rent then
we must explore the new expense and location of the buyer.
•
3) If the seller is only adding his personal bill into the
business expenses then this will be a difficult item to prove.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
$
-
Rental Income
$
-
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
2
3
4
Commissions
$
740.00
$
Depreciation
$
27,461.00
$
27,461.00
Non-Cash Event
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
Leased Equipment
$
$
$
8,899.00
5,940.00
10,067.00
$
$
$
8,899.00
2,841.00
10,067.00
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Lodging & Travel
Meals & Ent.
$
$
3,297.00
1,239.00
$
$
3,297.00
1,239.00
Office Supplies
Outside Services
$
$
4,830.00
401.00
$
$
Permits & Licenses
Professional Fees
$
$
533.00
2,319.00
$
$
-
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
-
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Vehicle Gas & Repairs
$ 20,614.00
$
5,688.00
$
189,354.00
271,233.00
618,659.00
Expenses
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
498,987.00
119,672.00
189,354.00
309,026.00
Not buyer specific
Owner's personal cell phones
-
5
6
7
8
9
10
11
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
Personal Home Utilities
14
Owner's personal truck
15
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it warrant
any assumptions as true and correct.The Seller agrees this information and additional documentation will be made available by this office or the Seller upon
acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a prospect or his Broker, whether a Buyer/Broker
or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
0
Owner’s Personal Auto
Item # 15
Owner’s Personal Auto are “typically” considered an add back
and here’s why:
•
1) When considering this add back an underwriter looks at
whether this vehicle is used for the business and by the
business to produce the gross revenues as reported. If this
vehicle is not critical to sales then it is usually considered an
add back.
•
2) What is NO LONGER accepted as an add back by lenders
as of 2012 are costs related to vehicles. Meaning: Fuel and
repairs are NO longer accepted as add backs as proving
them is very difficult.
•
3) We can ONLY add back actual “Lease or loan payments”
on that vehicle providing we have proof that the payments
were being paid from the business accounts.
Owners Benefit Statement for: Some IT service Company USA
Period: 2009
P&L:
Tax Return: X Owner
Prove:
Annualized:
OwnertoRecords
Add Backs
Reason
Item #
Seller Records
$
889,892.00
Add Backs
Reason
Gross Sales
Cost of Goods
Gross Profit
$
$
$
43,500.00
Personal home Items
1
Other Income
Rental Income
$
$
Total Gross Profit
$
618,659.00
Advertising
$
22,394.00
$
20,105.00
Discountinued Advertising
Amortization
Cell Phones
$
$
3,487.00
2,247.00
$
$
3,487.00
2,247.00
Not buyer specific
Owner's personal cell phones
2
3
4
Commissions
Depreciation
$
$
740.00
27,461.00
$
$
27,461.00
Non-Cash Event
5
Dues & Subscriptions
Insurance
$
$
106.00
32,745.00
$
$
12,000.00
Family health insurance
Interest
Lease Van
$
$
8,899.00
5,940.00
$
$
8,899.00
2,841.00
Leased Equipment
Lodging & Travel
$
$
10,067.00
3,297.00
$
$
10,067.00
3,297.00
Meals & Ent.
Office Supplies
$
$
1,239.00
4,830.00
$
$
1,239.00
Outside Services
Permits & Licenses
Professional Fees
$
$
$
401.00
533.00
2,319.00
$
$
$
Rent/Lease
Repairs/Maintenance
$
$
33,584.00
893.00
$
$
Salaries & Wages
Salaries/Officers
$
$
246,858.00
46,688.00
$
$
46,688.00
Education and Training
Small Tools
$
$
1,150.00
3,301.00
$
$
1,150.00
Supplies Not For Sale
Taxes & Licenses
$
$
2,073.00
5,417.00
$
$
Telephone
Tolls
$
$
3,100.00
202.00
$
$
Trash Removal
Utilities
$
$
1,548.00
6,854.00
$
$
685.00
Personal Home Utilities
Vehicle Gas & Repairs
Totals Expenses
Net Profit
Total Add Backs
Total Owner Benefit
$
$
$
$
$
20,614.00
498,987.00
119,672.00
117,816.00
237,488.00
$
5,688.00
Owner's personal truck
271,233.00
618,659.00
-
Expenses
6
7
8
9
10
11
Not buyer specific
Owner's wife's personal car lease
One time equipment lease
Owner's personal
Owner's personal
-
-
12
13
Owners Salary
Owners MS Training
-
-
$ 117,816.00
$
14
15
71,538.00
The above set forth information has been secured from the Seller. Diamond Financial in no way guarantees the accuracy of such information, nor does it
warrant any assumptions as true and correct.The Seller agrees this information and additional documentation will be made avai lable by this office or the Seller
upon acceptance of an earnest money offer to purchase.The Seller authorizes the Broker to disclose this information to a pros pect or his Broker, whether a
Buyer/Broker or Transaction Broker.
I certify the above is true and correct_____________________________________Date_________________
A facsimile copy of this document and any signatures shall be construed as original.
Owner benefits are pre-tax, pre-owner salary and benefits, pre-depreciation, and pre-debt service.
Copyright to FBBA 124.1-04/95
0
June 2013
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