Appendix D Sample Normalization Adjustments

• Jurisdiction: United States

Appendix DSample Normalization Adjustments

The following list provides common areas to review for potential normalization adjustments that may be used in financial analysis and/or the preparation of a business valuation. Generally, normalization adjustments are not intended to present financial results in conformance with GAAP guidelines. Normalization adjustments often include unusual or nonrecurring items, nonoperating items, controlling adjustments and adjustments based on accounting policies and other normal practices of the industry. This list is not comprehensive, and the analyst should carefully assess the subject company for all potential adjustments based on considerations, including: type of entity, industry, basis of presentation of financial information (GAAP or otherwise), ownership structure and interest, and purpose of the valuation. See also Appendix C and the related discussions in Chapters 6 and 7.

Unusual, Nonrecurring and Extraordinary Items

• One-time realization of revenues or expenses due to nonrecurring contracts
• Gain or loss on the sale

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