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Jul 7, 2016

Capital expenditures, also known as capital outlays, relates to the acquisition of capital assets held over a period of time, usually more than a year. This can include expanding a plant facility, upgrading equipment such as company fleet cars, or installing a new computer system. Even though capital expenditures are used to improve the company, they are typically considered a liability as far as accounting is concerned. As a general rule, this type of expenditure is not directly tax deductible and is designed to be recouped over time through future performance and benefits. So when an owner is exiting the business, a large amount of recurring annual capital expenditures can complicate the sale. In this podcast Gower Idrees, CEO of RareBrain, explains how capital expenditures can impact valuation when trying to sell your company.

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