An add-back is a seller's claim that an expense shown in the historical business will not burden the buyer. The first pass should reproduce that claim, locate it in the financial records, and ask what evidence would show whether it is nonrecurring, discretionary, or likely to continue.
How is stated SDE rebuilt?
Start with the earnings line named in the CIM and walk each adjustment back to the P&L, general ledger, and tax return. Record the amount, year, account, seller explanation, and whether the same cost appears elsewhere. If the documents do not tie, show the difference rather than forcing the seller's total to reconcile.
Which questions make an add-back testable?
Ask for the invoice, payroll record, related-party agreement, owner benefit detail, settlement document, or other source that fits the claim. Then ask whether the buyer will need to replace the owner's labor, whether the cost repeated in another year, and whether the business can operate without it. Those questions produce diligence; a red label alone does not.
What does the brief say about the result?
The brief marks each stated adjustment as supported, unsupported, recurring-looking, or still open based on the supplied record. It does not certify earnings or determine value. The buyer decides what to pursue with the seller and professional team, and Reality Contact never contacts the broker or seller.
What can the Reality Contact check provide?
The free card calculates coverage at the asking price, 10% under, and 20% under with every loan assumption printed. The $149 CIM first look identifies claims, omissions, stated add-backs, coverage, and ten broker questions. The $495 pre-LOI brief adds the tax-return and P&L tie-out, deeper add-back reconstruction, concentration and owner-dependence read, working-capital estimate, and thirty questions. The buyer sends every question.
Where does the operator boundary sit?
This is not financial advice. Reality Contact, LLC writes an analysis memo from buyer-supplied documents. It is not a quality-of-earnings report, audit, assurance engagement, valuation, or opinion. Reality Contact is not a CPA firm or broker, takes no closing-linked fee, contacts no seller, broker, or lender, and gives no recommendation. The coverage card is a real calculation on printed assumptions. Reality Contact is sampling whether buyers want the deeper document read. We reply by email with the ask, 10% under, and 20% under cases so the arithmetic can be rerun. The current source check starts with this published record.