You Can’t Add Back What You’re Still Doing: An IT Services CEO’s Guide to Clean EBITDA

In this episode of Shoot the Moon, the Revenue Rocket team—Ryan Barnett, Mike Harvath, and Matt Lockhart—unpacks a foundational concept in IT services  M&A deals: EBITDA add-backs. Whether you run a Managed Service Provider, a Microsoft or SAP channel partner firm, a cybersecurity practice, or a custom development shop, understanding what qualifies as a legitimate add-back can significantly affect your valuation in a transaction. The team covers the good, the bad, and the ridiculous—breaking down why aggressive or misguided add-backs can backfire and erode trust with a buyer. They also explore how recurring bonus plans, inflated owner salaries, and "strategic" spend are treated when it’s time to negotiate your exit. This episode is a must-listen if you're:Considering a sale or recapitalization in the next 12–36 monthsWanting to improve your EBITDA story before going to marketWondering if that golf membership you expensed is helping or hurting your exit   Key topics include:The golden rule: “Add it back only if it’s truly gone—for good”Owner salary treatment (especially if you stay on post-sale)Bonuses, personal expenses, legal fees, and other gray zonesBuyer synergies vs. seller add-backs—don’t confuse the twoReal-world examples of questionable add-backs (boats, jets, services and all) Listen to Shoot the Moon on Apple Podcasts or Spotify. Buy, sell, or grow your tech-enabled services firm with Revenue Rocket.