A list of costs a seller would like to remove is not, by itself, a defensible earnings figure. A useful adjustment schedule lets a buyer trace each proposed change back to the accounts and understand why it should affect the assessment of ongoing performance.
Scope: preparation for UK private-business valuation and sale discussions. Sources checked on 7 September 2026. The example is illustrative, not a valuation, accounting-policy decision or client case study.
Start from a reconciled number
EBITDA means earnings before interest, tax, depreciation and amortisation. ICAEW’s Completion Mechanisms guidance explains that transaction pricing may use normalised EBITDA, including adjustments for one-off income or costs. It also makes clear that the pricing multiple depends on factors such as risk and earnings sustainability.
First reconcile the starting EBITDA to the relevant accounts and define the period. Keep that reconciliation separate from the proposed adjustments. An expense already excluded from your starting measure cannot be added back again.
A worked example with adjustments in both directions
Assume reported EBITDA for the year ended 31 December 2025 is £240,000. For this simplified discussion, every item below is already included in that starting figure.
Proposed addition: £18,000. A specific relocation expense is supported by invoices. Assume the parties accept that it will not recur in the earnings period being assessed.
Proposed deduction: £10,000. A non-recurring receipt increased reported EBITDA. Assume the parties agree that it should be excluded from ongoing earnings.
Further deduction: £25,000. Assume a documented replacement-management cost is £25,000 higher than the cost included in the accounts. This reduces the illustrative maintainable earnings rather than increasing them.
Illustrative adjusted EBITDA: £240,000 + £18,000 − £10,000 − £25,000 = £223,000. If a separate £12,000 annual marketing expense is proposed as an add-back but will continue, our example leaves it in the cost base.
These assumed treatments are not rules for accepting those categories. A relocation programme might span several periods, a receipt might reflect ordinary trading, and replacement-management requirements depend on the transaction. Evidence and the agreed purpose drive the conclusion.
Give every adjustment a short evidence record
Identify: assign an adjustment number, ledger account, invoice or other record, date, amount and sign. Show exactly where the item entered reported EBITDA.
Explain: write the reason for the proposed treatment, whether related costs occur in other periods, and what the business will spend instead. Record contrary evidence as well as supporting evidence.
Track: mark each item proposed, supported, disputed or agreed. Keep the unadjusted figure visible so a reviewer can rebuild the calculation without trusting a pasted total.
ICAEW’s Financial Due Diligence guidance describes reconciling management information with financial statements. That discipline is useful here: explain missing year-end adjustments before debating a valuation adjustment.
Do not turn an adjustment into a promised price
A higher earnings figure does not guarantee a higher offer. Buyers may challenge sustainability, the multiple or the wider transaction terms. This exercise supports an earnings discussion; it does not calculate shareholder proceeds or replace professional valuation judgment.
KBA offers business valuation and financial due diligence. For the next stage, see our separate guide to enterprise value and equity value. Request a consultation with recent accounts, your proposed adjustment schedule and the purpose of the valuation.