Can I add my salary back to EBITDA?
Only the portion above a market rate for the work you actually do. Adding the whole salary back assumes the buyer gets a free chief executive, which no buyer accepts.
Only the part above a market rate for the work you actually do. If you pay yourself €190,000 for a role a hired manager would fill at €95,000, the €95,000 difference is a legitimate normalisation. The rest is an operating cost.
Why the full add-back fails
Adding your entire salary back to EBITDA assumes the buyer inherits a business that runs without anyone in your seat. Unless that is literally true — you genuinely do nothing and the business performs — a buyer will reinstate the market-rate cost, and they will do it in the first hour.
- Salary paid
- €190,000
- Market rate for the role
- €95,000
- deducted, not added back
- Legitimate add-back
- €95,000
How to establish the market rate honestly
List what you actually do in a week, then price the role you would need to advertise to replace it. If you are doing three jobs, price three part-time roles rather than one, and expect a buyer to test the figure against salary data for your sector and region.
The exception
If you are presenting SDE rather than EBITDA, one owner's full compensation is added back by definition — that is what SDE means, and the lower multiple attached to it accounts for exactly this. See SDE vs EBITDA.
How EBITDA affects your valuation covers which other add-backs survive scrutiny.