Common legitimate add-backs include:
- One-time legal or consulting fees (e.g., a one-off lawsuit, fees or other costs related to an M&A transaction or to a system implementation).
- Severance costs for terminated employees that seldom if ever occur.
- Natural disaster-related expenses.
- Owner-related discretionary expenses (e.g., personal travel, excessive salaries, or wages paid to non-working family members).
- Non-operating expenses (e.g., investment losses, which are unrelated to the core business).
