Add-backs and seller earnings explained.

What an add-back is.

An add-back is a cost in the accounts that a buyer removes because it is not part of the ongoing cost of running the business under normal ownership. In small, owner-operated businesses, buyers usually start with seller's discretionary earnings (SDE), because they want the total financial benefit available to one working owner. In larger or more manager-run businesses, they usually work off normalised EBITDA instead, which assumes a market-rate management structure stays in place rather than one owner doing everything.

What usually gets reviewed.

Common add-backs are the owner's wage above a market replacement salary, personal costs run through the business, genuine one-offs, and non-cash items like depreciation. Buyers are testing wage and super numbers more closely than they used to, because Single Touch Payroll and, from 1 July 2026, Payday Super make payroll history much easier to check. "We were a bit behind on super" is no longer a minor bookkeeping footnote, it changes working capital and buyer trust.

On multiples: for the size and type of business Altevro looks at, current Australian and comparable market evidence points to roughly 2 to 4 times SDE, shifting to normalised EBITDA once a business is large enough to run with paid management. Businesses with contracted recurring revenue, low owner dependence, and a properly licensed team sit toward the top of that range; thinner, owner-attached businesses sit toward the bottom. It varies by trade too: plumbing commonly runs around 3 to 5 times EBITDA, electrical closer to 3.5 times for a solid but concentrated operator, and commercial cleaning around 3 to 4 times EBITDA against 1.5 to 2.5 times for residential-style cleaning. Two Altevro sectors do not really fit this model: strata and property management businesses are usually priced on a multiple of management fees or the rent roll, commonly around 3 to 3.5 times, not SDE, and RTOs are typically priced around 2.5 to 4 times EBITDA with heavy discounting for registration and funding risk. Treat all of this as indicative. Australia has no single open, authoritative database of completed small business sales, so these figures are triangulated from broker commentary, marketplace data, and, for the size pattern specifically, US market-pulse data, not a settled Australian benchmark.

The buyer will verify it.

A serious buyer will test every add-back against evidence: invoices, bank statements, contracts, and a clear explanation of why each item genuinely will not recur. If the same "one-off" expense turns up every year, it is not one.

Two completion mechanics matter separately from add-backs. Most trading business sales in Australia complete GST-free as a "going concern", provided both parties are GST-registered, agree in writing, the buyer gets everything needed to keep operating, and you carry on the business until settlement. And in NSW, transfer duty on business assets like goodwill, IP, and licences was abolished back in 2016, but duty still applies if the deal includes land or a lease interest, which matters if you are selling out of leased premises.

The short version.

• An add-back restates profit to show what the business really earns for its owner, not a flattering adjustment.
• SDE suits owner-operated businesses; normalised EBITDA suits businesses that already run with a market-rate management structure.
• Payroll and super history is easier for buyers to verify than it used to be, so restate earnings at current rates yourself.
• GST going concern treatment and NSW duty rules need to be addressed explicitly in the contract, not assumed.