Owner compensation
Compare total owner cost with credible replacement compensation for continuing duties.
Free local worksheet
Test MSP EBITDA add-backs before a buyer does
A supportable add-back is specific, documented, nonrecurring or clearly replaceable, and consistent with the future operating model. A cost does not disappear merely because an owner dislikes it. Record the amount, period, evidence, rationale, and likely buyer response.
What the decision depends on
FactorWhat to check
Personal and discretionary costs
Tie personal expenses, travel, and vehicle costs to ledger records and future need.
One-time operating costs
Document professional fees, migrations, unusual bad debt, and nonrecurring employee costs.
Related-party and recurring costs
Normalize rent or other related-party charges to a defensible market and operating basis.
Normalization bridge
Count only adjustments you can support
Use a negative amount when the future business needs an added replacement cost.
Worked example
For every proposed adjustment, capture: reported amount, proposed add-back, recurring status, source document, owner explanation, replacement cost, and buyer challenge. Mark unsupported or recurring items aggressive.
Questions owners ask
Which MSP expenses can support an EBITDA add-back?
Focus on costs that are specific, documented, nonrecurring, personal, or clearly replaced under the future operating model. Recurring operating costs normally remain.
What proof should sit beside each proposed add-back?
Keep the ledger entry, invoice or payroll record, period, business explanation, recurring status, and any replacement cost a buyer will need to understand.
How should owner compensation be normalized?
Separate personal or discretionary cost from the market cost of the work that must continue after the owner leaves.
Get a second opinion on this decision
Send your website and the decision you are weighing. We will confirm the price, then send the payment link and a short intake.