Add-Back
An add-back is an expense removed from reported earnings during valuation because a new owner will not incur it: owner compensation, non-cash charges, documented personal spending, or a genuinely one-time cost. Every add-back requires a source document.
Why Add-Back Matters in a Laundromat Sale
Add-backs decide the earnings figure the multiple is applied to, so each one is worth its amount times the multiple. On a 3.5x deal, a legitimate $8,000 add-back adds $28,000 of price, and an add-back struck by the buyer's lender removes the same amount. Sellers lose more value to unsupportable add-backs than to almost any other single mistake.
Example
A seller claims $31,000 of add-backs: $22,000 owner salary, $5,000 personal vehicle, and $4,000 of 'miscellaneous.' The first two have payroll records and a mileage log. The third has nothing. The lender strikes $4,000, which costs the seller $14,000 of price at 3.5x.
The Common Mistake
Recurring costs are not add-backs. Ordinary repairs, routine cleaning, card-processing fees, insurance, and family labor a buyer must replace all stay in the expenses no matter how the seller labels them.
What to Check
- List every claimed add-back with the document that proves it, side by side.
- Strike anything recurring: repairs, cleaning, card fees, insurance, family labor a buyer must replace.
- Value each add-back at its amount times the multiple, so you know what a struck item actually costs.
Where This Comes Up
- Laundromat Add-Backs Explained: What Survives Buyer Scrutiny
- SDE vs. EBITDA for Laundromats: Which Number Prices Your Store
- How Much Is My Laundromat Worth? A Broker Pricing Walkthrough
Related Terms
- SDE (Seller's Discretionary Earnings) — SDE, or seller's discretionary earnings
- Owner Benefit — Owner benefit is the total value an owner extracts from a business in a year
- QoE (Quality of Earnings) — QoE, or quality of earnings
- Goodwill — Goodwill is the value of a business beyond the fair market value of its identifiable assets: the customer base
See the full laundromat glossary for all 78 terms.
The Next Step
This page is general information about laundromat transactions, not legal, tax, or investment advice, and not a guarantee of sale price, timing, or financing approval. Verify current rules with your own CPA, attorney, lender, and the relevant state or municipal agency before acting.