The smell of damp concrete and the low, rhythmic hum of the hangar door’s chain drive are the true markers of a Friday evening in October. It is a specific kind of cold-the kind that hasn’t yet forced the building’s main heating system to kick in, but makes the air in the FBO lobby feel thin and brittle.
Gary Lund is kneeling in front of the crew lounge refrigerator, his breath hitching slightly as he slides a fresh case of Dasani into the bottom rack. He knows the Gulfstream crews that come in on Saturday mornings like this specific brand, chilled to a temperature that most people would find painful to drink. He’s been doing this for .
The Weight of Section 7
Watching from the glass-walled office upstairs, Bill Ferrante feels the weight of the document in his jacket pocket. It is a Letter of Intent (LOI),
of legalistic precision that represents the culmination of thirty-four years of his life’s work.
He’s read Section 7 four times tonight. It’s titled “Employee Matters,” and it contains a sentence that feels like a lead weight: “Buyer may offer employment to Seller’s General Manager at Buyer’s discretion and upon terms to be determined following the Execution Date.”
In the informal order of a family-run aviation business, “at Buyer’s discretion” is a foreign language. For nearly two decades, Bill has told Gary at every Christmas party-usually after the third drink and before the gift cards are handed out-that this place would be “partly yours one day.”
It was a covenant, a verbal bridge built over thousands of shared headaches, from midnight snow removals to the time a Cessna 172 ended up in the grass during a botched solo.
The Error of Objective Math
I have to admit, I used to think that “fair market value” was an objective destination reached through math and spreadsheet discipline. I was wrong. I spent years believing that if the multiples were right and the EBITDA was scrubbed clean, the deal was “good.”
I once even advised a seller to keep the “staff talk” to an absolute minimum to avoid spooking the buyer, essentially telling him to treat his key employees like equipment that came with the lease. I sent that advice in a long, overly confident email and, in my haste to be the “tough-minded advisor,” I actually forgot to attach the very valuation model I was touting.
The deal nearly collapsed three weeks later, not because of the money, but because the owner couldn’t look his head mechanic in the eye. I realized then that an FBO isn’t just a collection of fuel tanks and hangar square footage; it is a delicate web of unspoken expectations.
When a founder-led company moves toward a transaction, the owner often searches for “how to take care of a key employee” as if there is a secret tax-advantaged formula.
What they are actually asking is how to keep a promise they never had the courage to put on paper. They realize that a significant portion of their authority-and the loyalty they enjoyed-was borrowed from a future they were always planning to sell to someone else.
Transactional Bribes vs. Covenants
The standard corporate response to this is the “stay bonus.” The buyer wants the GM to stick around through the transition because the GM is the one who knows which hangar door sticks and which local pilot has a standing “no-charge” for the GPU.
For someone like Gary, who has treated the FBO as his own for half his adult life based on a vague promise of “a piece,” a stay bonus feels like being told you’re the most important person in the building, right up until the moment you aren’t.
The GM works the weekend because the owner let him use the company truck to move his daughter into college. The owner pays for a specialized training course because the GM didn’t ask for a raise during the lean year of .
These are the “ghost liabilities” of a family business. When a professional buyer-a private equity firm or a national network-enters the picture, they only see what is recorded. They see the payroll, the benefits, and the job description. They don’t see the “someday” promise because it’s not on the balance sheet.
The Value of Specialized Translation
This is why the role of a specialized advisor is so critical. A generalist business broker might just see Section 7 as a standard “boilerplate” clause. But in the aviation world, where the relationship between the FBO and the airport sponsor or the based tenants is everything, that boilerplate can be the thing that kills the deal.
It takes a firm that understands the specific economics of fuel margins and hangar occupancy to also understand the value of the person managing them. You need a partner who knows how to translate “he’s been with me forever” into a structured, defensible piece of the transaction.
Structured Negotiation vs. Vague Promises
Working with
allows an owner to move past the vague “someday” and into a structured negotiation.
They understand that the GM’s “piece” needs to be handled long before the LOI is drafted, making Gary’s presence a strategic asset rather than a discretionary line item.
The mistake Bill is making, standing there with the paper in his pocket, is thinking that he can solve this with a secret “side deal” or by hoping the buyer is a “good guy.” Hope is not a closing strategy.
The reality is that the buyer has a fiduciary duty to their own investors to keep costs down. If Gary’s equity wasn’t formal, it doesn’t exist to them.
A Lesson in Tax Drag
I remember a transaction several years ago involving a maintenance shop in the Midwest. The owner had promised his lead tech a “big payout” when he retired. When the time came, the buyer refused to honor it, and the owner ended up paying the tech out of his own proceeds-after taxes.
He lost nearly
of that “gift” because he didn’t structure it as part of the deal. He felt like a hero for writing the check, but he was actually just paying a late fee on a twenty-year-old debt.
If Gary is responsible for maintaining the relationship with the flight department that brings in 41% of the fuel volume, then Gary’s retention is a capital requirement. It belongs in the valuation model. It belongs in the primary negotiations.
The Friday evening chill in the lobby doesn’t lift, but Gary eventually finishes the fridge. He stands up, rubs his lower back, and waves a hand toward the office window. He doesn’t know about Section 7.
He doesn’t know that his future is currently being “determined at Buyer’s discretion.” He just knows that the Gulfstream pilots expect their water at 38 degrees, and he’s the only one who bothers to check the thermostat.
A Gulfstream pilot might never notice the brand of bottled water, but a general manager notices the exact moment his nineteen years became a line item in a buyer’s discretion.
Bill needs to walk down those stairs. Not to tell Gary everything-confidentiality is still paramount-but to start the process of formalizing what has been informal for too long.
He needs to realize that the most expensive part of selling his business isn’t the commission or the legal fees; it’s the cost of a promise that was never written down.
Kept Promises as Foundation
In the end, the “soul” of a founder-led business is often just the sum of its kept promises. When those promises are brought into the light of a formal transaction, they either become the foundation of a successful exit or the cracks that cause the whole structure to settle unevenly.
You cannot wait until the LOI is in your pocket to decide that nineteen years is worth more than “discretion.” By then, the math has already been done, and the room has already gone cold.