Following is a case study of an actual engagement we have completed. The names and exact locations may have been changed to maintain confidentiality for our clients.

The owner of a long-established manufacturing company in Massachusetts was planning his retirement and wanted to transition the business to his key employee. Both parties needed an independent, professionally prepared valuation to establish a fair purchase price for the buyout.

The business had been operating profitably for decades with a strong regional reputation. But like many closely-held manufacturers, the owner’s compensation and personal expenses were mixed into the company’s financials, making the true earnings picture hard to see.

• Owner dependency — The business relied heavily on the owner’s relationships with key customers and suppliers
• Financial normalization — Personal expenses, above-market owner compensation, and discretionary costs needed to be identified and adjusted to reflect true EBITDA
• Buyer capacity — The key employee didn’t have significant capital, requiring a seller-financed structure
• Industry headwinds — Customer concentration and cyclical demand in manufacturing required a conservative valuation approach

1. Financial normalization — Analyzed 3 years of tax returns and P&Ls to identify legitimate add-backs, arriving at a normalized EBITDA that reflected the business’s true sustainable earnings
2. Market comps — Benchmarked against comparable manufacturing transactions using ValuSource and DealStats databases
3. Risk-adjusted multiple — Applied a risk premium for customer concentration, resulting in a fair-market value range both parties could agree on
4. Structuring recommendation — Proposed a gradual buyout structure with the owner retaining a minority stake during transition, reducing upfront cash requirement while keeping the owner engaged through the handoff

Both parties received a detailed 20+ page appraisal report with clear methodology, documentation of every add-back, and market comparable support. The agreed valuation range formed the basis of a buy-sell agreement drafted by their attorney. The owner is on track for his planned retirement, and the key employee now has a structured path to full ownership.

• Engagement type: Business appraisal (full report)
• Valuation methodology: Market approach + income approach
• Report includes: Normalized EBITDA, market comps, risk premium analysis
• Advisor: Joshua Meltzer, CBI, CFP, CMSBB, CEPA

Internal - Key Employee

Business Appraisal for Partnership Buyout