One-Off Items in the EBITDA Bridge: What Counts and What Doesn't

One-off items are the most common type of EBITDA adjustment in Financial Due Diligence — and the most frequently mishandled by interview candidates. Here's how to think about them rigorously.

What makes an item "one-off"?

A one-off item is a charge or income that meets two conditions:

1. It is non-recurring by nature — it will not repeat in future years under normal operating conditions.
2. It is separately identifiable — there is documentation proving its existence and amount.

The recurrence test is more important than it sounds. Many sellers present costs as one-off that turn out to be recurring under different names. If a company reports "exceptional restructuring costs" every single year, those costs are structural, not exceptional.

Common valid one-off adjustments

Transaction-related costs: M&A advisory fees, legal fees, due diligence costs incurred in the context of a transaction — these are unambiguously non-recurring.

Redundancy and severance payments: one-off departures, particularly of senior executives. Must be verified against HR records.

Gains or losses on asset disposals: selling a building or a non-core asset creates a one-time gain (or loss) that does not reflect operating performance.

Legal settlements: a one-time litigation payment that has been resolved. Requires legal counsel confirmation.

Costs related to a specific project: set-up costs for a new site that is now operational, or IT migration costs for a completed project.

Common invalid "one-off" claims

Recurring business restructurings: if the company reorganises every 18 months, the restructuring cost is embedded in the cost base.

Training and development: sometimes claimed as exceptional, rarely justified — ongoing training is part of running a business.

R&D costs labelled as one-off: unless the project was genuinely extraordinary and will not be repeated, ongoing R&D is a permanent cost.

Management fees to related parties: these need careful examination — they may reflect ongoing economic arrangements, not one-time events.

The validation process in practice

For every add-back proposed by management, an FDD analyst will:

1. Request supporting documentation (invoice, legal agreement, board minutes).
2. Cross-reference against prior years to test for recurrence.
3. Challenge the economic logic: could this cost appear again in a different form?
4. Quantify the materiality — a EUR 15k adjustment on a EUR 5m EBITDA doesn't change a deal, but a EUR 400k adjustment does.

How to talk about this in an interview

"I would request the invoice for each adjustment, verify that the same or similar charge doesn't appear in prior periods, and assess whether there's an ongoing obligation that could recur. If the documentation is clear and the non-recurrence is verifiable, I'd accept the add-back. If it's recurring under different labels, I'd challenge it."

The programme's case studies include management adjustment schedules with contested items for you to validate or reject — exactly the exercise you'll face in a live interview or on the job.