Financial Due Diligence

SDE & EBITDA Add-Back Forensic Audit

Sellers routinely inflate SDE by 20% to 50% by adding back ongoing essential operating costs under the guise of 'one-time personal expenses'. A forensic audit isolates true normalized cash flow.

🚩 Common Seller Red Flags & Tricks

Adding back contractor dev fees as 'one-time upgrades' when the codebase requires continuous maintenance.
Zero dollar salary for founder performing 50 hours/week of customer support and code shipping.
Excluding ongoing Stripe merchant processing fees or chargeback losses from P&L expenses.
Mismatch between accrual revenue reported and bank statement cash deposits.

🛡️ Buyer Forensic Audit Steps

Obtain raw Stripe, PayPal, or merchant processor export `.csv` files and reconcile against bank deposits.
Calculate replacement cost for founder labor (minimum $60k-$90k/year deduction from SDE).
Re-classify recurring software licenses (AWS, GitHub, Intercom) erroneously categorized as one-time expenses.
Recalculate realistic Net SDE to establish actual valuation floor.

Audit an Acquisition Target Now

Don't overpay for someone else's headache. Let our AI roast the P&L and generate an asymmetric LOI.

Start Instant Deal Audit →