Promoter Salary Normalization

Adjustment of profits for below- or above-market promoter compensation — sellers drawing artificially low salaries should anticipate buyers normalizing this against valuation.

Seller Example

Promoter of a Coimbatore engineering job-work unit drawing only ₹6 Lakh/year anticipates the buyer normalizing EBITDA down by ₹30 Lakh for a market-rate CEO replacement cost, and pre-negotiates a higher multiple to compensate rather than being surprised by a lower closing offer.