The Intent:

Management wants to buy the business, and the owner wants a fair price that reflects real value without being distorted by insider knowledge or optimistic projections. Both sides want the business to survive after the transaction.

How I solve it:

I value the business as if management were replaced at fair market cost, not as if their continued involvement is guaranteed for free. I apply the 25 Factors Affecting Business Valuation, focusing on Factor #4: Return on Investment, Factor #13: Management Capability & Workforce, Factor #5: Liquidity, and Factor #24: Risk.

The 5 Senses Inspection Report tests whether systems, staff, and culture are strong enough to operate independently of the selling owner and without informal subsidies.

Experience:

MBOs are where conflicts of interest quietly distort value. After 10–15 years of observing MBOs succeed and fail, patterns emerge showing when management optimism is justified and when it is not.

This judgment protects sellers from underpricing and managers from overleveraging. See my “Experience” link.

The Result:

You receive an MBO valuation that is fair, defensible, and sustainable for the business post-closing.

The Intent:

Management wants to understand what is realistically required to buy the business without relying on assumptions that will collapse under financing or operational pressure.

How I solve it:

I use the 25 Factors to assess whether the business can support acquisition debt after adjusting management compensation to fair market value. Factor #4: ROI, Factor #5: Liquidity, Factor #7: Cost of Liquidation, and Factor #24: Risk are central.

The 5 Senses Inspection Report reveals whether managers already run the business in practice or whether the owner still absorbs critical risk and decision-making.

Experience:

Experience shows that many MBOs fail not at closing, but six to eighteen months later. After years of watching post-MBO outcomes, it becomes clear which assumptions survive reality.

That insight cannot be modeled. See my “Experience” link.

The Result:

Managers gain a realistic understanding of what ownership requires, reducing failure risk.

The Intent:

Both seller and management want to agree on a price that neither side regrets once the deal is done.

How I solve it:

I define fair value using the 25 Factors Affecting Business Valuation, ensuring that pricing reflects transferable value rather than insider advantage. Factor #21: Minority Interest, Factor #22: Special Interest Purchaser, Factor #24: Risk, and Factor #25: Opportunity are particularly relevant in MBOs.

The 5 Senses Inspection Report ensures the valuation reflects how the business actually functions under management control.

Experience:

After years of seeing MBOs unravel due to perceived unfairness, it becomes clear that transparency and realism matter more than speed. Experience teaches where resentment forms and how to prevent it.

This is judgment earned through repetition. See my “Experience” link.

The Result:

You reach a fair value conclusion that supports a durable transition and reduces post-deal conflict.