was the year George Pullman decided to build a utopia on the Illinois prairie. He didn’t just build a factory for his sleeping cars; he built a town. There were brick houses with indoor plumbing, a library filled with leather-bound volumes, a theater for the arts, and parks where the grass was kept short by a small army of gardeners.
To a modern private equity analyst, the entire town of Pullman would have looked like a massive, rolling list of discretionary add-backs. Why pay for a theater when you are in the business of manufacturing rail cars? Why subsidize the plumbing of a mechanic when the market rate for labor doesn’t require it?
Pullman believed these “luxuries” were the secret gears of productivity. He was right, until he wasn’t. When the panic of hit and he began striking those “discretionary” costs from the ledger while refusing to lower the rents, the ensuing strike didn’t just stop his factory-it nearly broke the American rail system.
The Weight of the Ramp
Fourteen inches of reinforced concrete hummed under my boots as I walked toward the FBO terminal, the vibration coming from a Gulfstream G650ER spooling up its engines away. The air on the ramp has a specific weight to it; it’s thick with the scent of Jet-A and the shimmering heat of a July afternoon.
I bit my tongue while eating a sandwich on the way here-a sharp, metallic sting that makes every word I speak feel like it’s being filtered through a jagged edge. It’s a small, private irritation, much like the friction that was currently building in the conference room on the second floor.
Ninety-eight hundred gallons of fuel sat in the truck parked near the hangar doors, a silent witness to the volume this facility moves. Inside the office, the carpet is a faded shade of navy blue that was probably popular in , and the air smells of scorched coffee and old paper.
Walt, the man who built this FBO from a single Cessna hangar into a regional powerhouse, sat at the head of a mahogany table that had seen better days. Across from him sat an associate from a mid-market acquisition fund, a woman named Sarah who was currently highlighting a line item in a spreadsheet with a yellow marker.
Items identified as “lifestyle adjustments” by the acquisition associate, destined for the EBITDA add-back list.
Sarah looked up, her expression neutral, the kind of face that has been trained to see numbers as pure data, stripped of their terrestrial weight. “These are clearly discretionary, Walt,” she said. “If we add these back to the EBITDA, we can get the valuation to where you want it. But we need to be clear: these expenses won’t exist on Day 2. They are ‘lifestyle’ adjustments.”
Walt didn’t look at the spreadsheet. He looked at the window, where a line technician named Jerry was currently marshaling a Challenger 350 into a tight spot. Jerry has been here for . He knows every crack in the taxiway. He also knows that the holiday dinner is the only time his wife gets to see that the “big boss” actually knows her name.
“That’s not an add-back,” Walt said, his voice grating slightly against the hum of the air conditioner. “That’s the glue. You take that dinner away, and you’re not saving eleven thousand dollars. You’re losing twenty years of institutional memory when Jerry decides he’s had enough of the heat and goes to work for the competitor across the field.”
The Retention Paradox
This is the central paradox of the founder-led business sale. The buyer wants to strip away the “excess” to reveal the true earning power of the asset. The seller knows that the excess is often the very thing that makes the asset work.
In the world of aviation M&A, where the difference between a safe operation and a catastrophic insurance claim is often the loyalty of a single mechanic, these “lifestyle” expenses are frequently mislabeled. They are actually an informal, unwritten retention system.
Ethan M.-L., a typeface designer I’ve known for years who views the world through the lens of structural balance, once told me something while we were looking at a proof for a new sans-serif font. He pointed to the “kerning”-the space between the letters.
“If you remove the negative space to save room on the page, the word becomes a black smudge. It’s unreadable. The space isn’t ‘extra.’ The space is what makes the letter a letter.”
– Ethan M.-L., Typeface Designer
In an FBO, the add-backs are the kerning. They are the “unnecessary” spaces between the hard costs of fuel and the revenue of hangar rent. When you strike them, the business might look more efficient on a screen, but it becomes unreadable to the people who actually run it.
I watched Walt’s hand tighten on his coffee mug. He wasn’t just defending his truck or his son’s salary; he was defending the ecosystem he had spent his life cultivating. To the buyer, the truck was a tax-shielded indulgence.
To Walt, it was the vehicle that had jumped-started thirty different aircraft in the middle of sub-zero January nights when the GPU failed. It was a tool of the trade, even if the accountants called it a perk.
This is why the due diligence process in aviation is so fraught with misunderstanding. A buyer sees a $50,000 “bonus pool” that isn’t tied to any formal KPI and sees an opportunity for “operational optimization.” They don’t see the afternoon three years ago when the entire hangar stayed until to fix a bird-strike on a charter jet so a local CEO could make his daughter’s wedding. Those envelopes of cash were the “thank you” that the formal payroll system could never quite capture.
The Maintenance of Human Capital
The risk for an acquirer is that they price the business based on the removal of these costs, only to find that the costs were actually the maintenance budget for the human capital. If the line techs leave, the fuel volume drops. If the fuel volume drops, the ground lease-the most precious document in the FBO’s filing cabinet-becomes a liability rather than an asset.
Most FBOs operate on airport land they don’t own, under leases that require certain levels of service and investment. If the “discretionary” cuts lead to a service decline, the airport authority might start looking at the “default” clauses in that lease.
In the specific world of aviation, this is where a firm like
earns its keep, acting as the filter that separates a “bloated expense” from a “mission-critical retention tool” before the LOI is even signed.
You have to test these add-backs. You can’t just accept them, and you can’t just strike them. You have to walk the ramp. You have to talk to the man named Jerry. You have to understand if the holiday dinner is a party or a pillar.
We moved from the conference room down to the hangar floor. The temperature jumped twelve degrees the moment we stepped past the heavy fire doors. Two technicians were working on the landing gear of a Hawker 800XP. The space was immaculate. There wasn’t a drop of oil on the floor.
That level of cleanliness isn’t the result of a corporate mandate; it’s the result of pride. And pride is a difficult thing to calculate in an Excel formula. Sarah, the associate, looked at the Hawker and then at her clipboard. She was still thinking about the $4,210 hockey sponsorship. To her, it was a leak. To the head mechanic, whose son was the star defenseman on that team, it was the reason he didn’t complain when he was asked to work through his weekend.
I felt the sting in my tongue again. It’s a sharp reminder that reality is often more painful and more complex than the stories we tell ourselves. The buyer tells a story of “synergy” and “efficiency.” The seller tells a story of “legacy” and “family.” The truth is usually found in the friction between the two.
If you are buying an FBO, you aren’t just buying a fuel farm and a collection of hangars. You are buying a series of relationships that have been negotiated in the “negative space” of the ledger for decades.
If you strike every add-back, you might find yourself owning a very expensive, very quiet piece of concrete. The technicians will take their wrenches and their loyalty across the field to the guy who still sponsors the hockey team and still knows their wives’ names.
As we walked back toward the terminal, the Gulfstream finally took off, its engines roaring with a force that vibrated in my chest. Walt watched it climb into the hazy blue sky. He didn’t say anything, but I could see him calculating the cost of the silence that would follow if this deal went through exactly as Sarah wanted it. He wasn’t just selling a business; he was being asked to dismantle the very thing that made it a business in the first place.
The most dangerous number in any acquisition is the one that looks like a gift. An add-back that increases your EBITDA and lowers your effective multiple is a siren song. It promises a cheaper entry price, but it often hides a hidden tax: the cost of rebuilding a culture from scratch.
Load-Bearing Add-Backs
Griffin Towers approaches these deals by looking for the “load-bearing add-backs.” It’s a process of stress-testing the expenses to see which ones are actually structural. If you remove the owner’s truck, does the operation fail? Probably not. If you remove the unwritten bonus that rewards the fuel call, does the service level collapse? Almost certainly.
We reached the gate. The chain-link fence rattled as I pushed through it. The sting in my tongue had subsided to a dull ache, a lingering reminder to be careful with things that seem simple, like a sandwich or a spreadsheet.
Walt shook Sarah’s hand, but he didn’t smile. He knew, even if she didn’t, that the list in her hand was a map of the soul of his company. And you can’t strike the soul of a company without expecting the body to eventually stop moving.
The sun was beginning to set, casting long, distorted shadows across the tarmac. The hangars looked like giant, resting beasts in the twilight. Behind us, in the office, the yellow highlighter was still sitting on the table, a bright, artificial streak against the old wood, marking the spots where the buyer thought they could find money, and where the seller knew they would find ruin.
