Recast

Definition

Redrawing the financials so the profit a buyer keeps becomes visible.

Why It Matters

This is the number the whole price is built on, so a careful buyer reproduces it from the tax returns rather than accepting the seller's spreadsheet, and the gap between the two versions is the negotiation. Work line by line and ask of every adjustment whether the cost genuinely disappears when the owner does. A vehicle the business still needs, a family member who does real work, and rent set below market all get added back routinely and none of them should be.

In numbers: A P&L showing $330,000 of net income recasts to $520,000 of SDE after adding back the owner's $150,000 salary, $25,000 of personal vehicle costs, and a $15,000 one-time lawsuit settlement; every add-back must survive the question 'will this cost exist for the buyer?'