As a buyer, if you accept addbacks, you will break covenants. And by breaking covenants, you lose control.
It's tempting for dealmakers to accept & rationalize addbacks in order to maintain forward momentum and close a deal. PE funds acquire companies at exaggerated valuations every day because the principals failed to stay vigilant & disciplined on addbacks (lucky for the seller!).
While closing a deal generates closing fees and enables upside potential, a misvalued deal is set on the wrong trajectory from the get-go, might become a headache, incur a big opportunity cost on your time, and ultimately put an irreparable blemish on your track record.
Good luck.
