Operating expenditures (OPEX)

Operating expenditures (OPEX) are costs incurred in the normal course of business operations, expensed through the income statement in the period they are incurred — as opposed to capital expenditures (CAPEX) which are capitalised as assets. In financial due diligence, the OPEX/CAPEX boundary is a key focus: companies may capitalise operational costs to artificially inflate EBITDA, or expense investments to reduce taxable income. Correctly classifying costs between OPEX and CAPEX is essential for producing a normalised, economically representative EBITDA.

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Example: due diligence on a Swiss software company reveals CHF 480,000 of development costs capitalised as CAPEX rather than expensed as OPEX. Under IFRS restatement, a significant portion of these costs should be recognised as period expenses — reducing normalised EBITDA and the DCF valuation by approximately CHF 1.9 million at a 4x EBITDA multiple, a material finding that impacts the acquisition price negotiation.

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Hectelion reviews the OPEX/CAPEX boundary as a systematic due diligence control point in every financial review.