Pro forma adjustments
A pro forma adjustment is used to display what the financials would look like on a theoretical basis (i.e., “what-if”). For example, if the company switched to a new service provider, they would present pro forma financials to reflect the cost savings or the cost increase from switching to a new provider. Management uses pro forma financials to assess whether they should change the business, and investors use pro forma financials to assess the potential of the business[Universal CPA Review]. Pro Forma Adjustment means, for any period that includes all or any part of a fiscal quarter included in any Post-Transaction Period, the pro forma increase or decrease in Consolidated EBITDA, which pro forma increase or decrease shall be based on the Borrower’s good faith projections and reasonable assumptions as a result of (a) actions taken, prior to or during such Post-Transaction Period, for the purposes of realizing reasonably identifiable and factually supportable cost savings, or (b) any additional costs incurred prior to or during such Post-Transaction Period to effect operating expense reductions and other operating improvements or synergies reasonably expected to result from a Specified Transaction; provided that, (A) so long as such actions are taken prior to or during such Post-Transaction Period or such costs are incurred prior to or during such Post-Transaction Period it may be assumed, for purposes of projecting such pro forma increase or decrease to Consolidated EBITDA, that such cost savings will be realizable during the entirety of such period, or such additional costs will be incurred during the entirety of such period, and (B) any such pro forma increase or decrease to Consolidated EBITDA shall be without duplication for cost savings or additional costs already included in Consolidated EBITDA for such period. Notwithstanding the foregoing, any Pro Forma Adjustment to Consolidated EBITDA for any period, together with any amounts added back pursuant to clauses (viii) and (xii) of the definition of “Consolidated EBITDA” for such period, shall not exceed the greater of $150.0 million and 20.00% of Consolidated EBITDA for the such period[Law Insider].
What is a pro forma adjustment? Universal CPA Review. Retrieved from: https://www.universalcpareview.com/ask-joey/what-is-a-pro-forma-adjustment/
Pro Forma Adjustment Definition: 1k Samples. Law Insider. Retrieved from: https://www.lawinsider.com/dictionary/pro-forma-adjustment