Are you more afraid of being wrong, or are you more afraid of being the only person in the room who is right? It is a question that few investment professionals ask out loud, yet it sits like a silent observer at every Monday morning committee meeting. In the world of high-stakes FBO acquisitions, where the assets are idiosyncratic and the barriers to entry are literally paved in asphalt, the pressure to conform to a “market number” often outweighs the evidence of the actual asset sitting on the tarmac.
The scene is almost always the same. Jonathan, a senior associate who has spent the last three weeks living in a Fairfield Inn near a secondary airport, is on slide fourteen. He is explaining the nuances of fuel margin durability. He has mapped out the flowage fees, the specific language in the ground lease regarding hangar reversion, and the fact that the competing FBO across the field has a debt load that will soon force them to hike their prices.
He is making a case for why this specific asset is worth exactly what he says it is, based on its unique mechanics. Then, a committee member-someone who hasn’t seen the airport since a layover in -leans back, taps a pen against a mahogany table, and asks the fatal question: “What did the last three FBO deals in this region trade at?”
The room exhales. The tension, which had been building around the complexity of leasehold law and fuel price sensitivity, evaporates. The discussion shifts from the granular reality of the asset to the safe, airy heights of multiples. The slide about the ground lease is never reached.
The deal is approved, not because the specific analysis of the hangar occupancy was bulletproof, but because the final number looked like the numbers everyone else was using. This is not merely a social quirk; it is a structural defense against the career-ending stigma of the “unforced error.” It’s about not being the guy who looks like a total idiot when the fuel margins tank because you thought you were smarter than the market.
Why do we spend six figures on technical diligence just to ignore it the moment someone mentions what a deal in a completely different flight corridor traded for last quarter?
I have to admit, I was wrong for a long time about the fundamental purpose of the Investment Memo. Early in my career, I operated under the naive assumption that the memo’s job was to inform-to provide a clear-eyed, data-driven map of the risks and rewards. I thought more data meant more truth. I was wrong.
After watching a particularly brilliant analysis of a distressed FBO get dismantled because the “multiple didn’t feel right,” I realized that the memo’s true job is often to provide a social safety net. It is a document designed to prove that, should the deal go south, the failure was “market-standard.” It is an insurance policy against being unique.
The Dangerous Incentive of the “Safe” Error
This creates a dangerous incentive structure. When a deal partner realizes that twenty minutes of explaining a complex lease will be discarded in favor of a one-sentence market comp, they learn to lead with the comp. They stop looking for the “correct” number and start looking for the “defensible” one.
A number anchored on comparable transactions is safe for the person presenting it even when it is wrong, because the error is shared with everyone else who used the same anchor. If the whole sector is overvalued, being wrong with the crowd is just “market volatility.” Being right alone, however, is a terrifying professional precipice.
Specific operational nuances that consensus multiples fail to quantify.
In the niche world of Fixed-Base Operators, this “consensus bias” is particularly toxic. Unlike a standard strip mall or a multifamily complex, an FBO’s value is often hidden in the dark corners of the airport’s master plan. It is found in the specific number of years remaining on a ground lease before the city takes the hangars back.
It is found in the “flowage fee,” a per-gallon tax that can change with the stroke of a pen at a city council meeting. It is found in the competitive share capture-the silent war between two operators on the same field for the loyalty of a few dozen flight departments.
When you ignore these specifics in favor of a regional multiple, you aren’t just simplifying the deal; you are lying to yourself about the risk. You are pricing the airport based on the weather in a different state. The analysis is a map of the territory, but the committee only wants to discuss the legend.
This is where the real work happens, far away from the glass conference rooms. It happens when you reconstruct the earnings of a target from scratch, stripping away the seller’s optimistic add-backs that would never survive a change in ownership.
It involves testing whether a “record year” in fuel sales was the result of a temporary construction project nearby or a sustainable shift in traffic patterns. This level of scrutiny is often uncomfortable because it produces numbers that don’t always align with the “market.” It produces the “correct” number, which is frequently a lonely one.
For a private equity sponsor or a family office, the challenge is to build a case that is both accurate and defensible. This requires an advocate who isn’t afraid to fight the “multiple” with the “mechanics.” It requires a firm like
that understands that the strongest negotiation position doesn’t come from quoting what happened at another airport, but from proving what is happening at this one.
Fact-based negotiation is the only safe landing.
When you negotiate against the evidence in the numbers rather than the asking price, you change the power dynamic of the deal. You move from a theater of opinion to a stadium of facts.
I’m writing this while nursing a sharp pain in the side of my mouth; I bit my tongue quite hard during breakfast this morning. It’s a distracting, nagging sting that colors my view of the world today-a reminder that the most painful errors are often the ones we inflict on ourselves while trying to do something as routine as eating.
Investment committees do the same thing. They bite their own tongues by forcing a deal into a familiar shape, wounding the long-term returns of the fund just to satisfy the immediate craving for consensus.
The Deceptive Rhythm of the “Add-back” Dance
Consider the “add-back” dance. A seller presents a pro forma EBITDA that includes adjustments for “non-recurring” legal fees or “owner-related” expenses. If the committee looks at the adjusted number and sees it fits the 9x multiple they’ve been seeing in the trades, they move on.
The “Defensible” Multiple: A statistical shield that often obscures underlying cash flow degradation.
But what if those legal fees are actually recurring costs for defending a lease dispute? What if the owner-related expenses are actually essential operational roles that the buyer will have to hire for at a higher salary? The defensible number (the 9x multiple) remains intact, but the correct number (the actual cash flow) is significantly lower.
We have reached a point where “market knowledge” has become a substitute for “asset knowledge.” This is how whole categories of assets end up mispriced. When everyone is looking at the same three “comparable” deals, they are all looking at the same errors. They are all standing in a circle, pointing at the person to their left, saying, “I’m safe because he did it too.”
The quiet cost of this behavior is that it de-skills the deal team. If the partner knows that the nuance of the hangar rates won’t be rewarded, they stop looking for the nuance. They become aggregators of consensus rather than hunters of value.
They learn to speak the language of the committee-a dialect of averages and medians-rather than the language of the operator, which is a tongue of fuel margins and asphalt maintenance.
To break this cycle, an institution must be willing to reward the “unfamiliar” analysis. It must be willing to let Jonathan finish slide fourteen. It must accept that a deal that doesn’t “look” like the last three deals might actually be the only one worth doing.
The true value in M&A advisory isn’t just in finding the target; it’s in providing the buyer with the intellectual ammunition to stand in front of a committee and say, “The market is wrong about this one, and here is exactly why.”
Ultimately, the goal of any acquisition should be to own an asset, not a consensus. The “defensible” number might save your career in the short term, providing a shield against criticism if the deal underperforms. But the “correct” number is the only one that will actually pay the LPs. It’s the only one that survives the transition from the glass conference room to the reality of the airport ramp.
“We should be more afraid of being wrong together than being right alone.”
We should be more suspicious of the number that everyone agrees on than the one that requires twenty minutes to explain. Because at the end of the day, when the hangar doors open and the planes start moving, the market multiple won’t be there to help you. Only the asset will.
And the asset doesn’t care what the last deal traded for; it only cares if the numbers you used to buy it were real.