E ighty-four percent of independent Fixed Base Operators operate with a shadow payroll of owner-provided labor that never appears on a Profit and Loss statement. This isn’t about tax avoidance or clever accounting; it is about the structural invisibility of the person who owns the keys. When a valuation professional sits down to “normalize” an FBO’s earnings, they perform a standard ritual. They strip out the owner’s discretionary spending-the country club dues, the personal vehicle lease, the travel to conventions that looks a lot like a vacation-and then they insert a market-rate salary for a General Manager.

The assumption is that a GM, hired from a competing network or promoted from within, will step into the owner’s shoes for $145,000 or $175,000 a year, and the business will continue its trajectory without a hitch. It is a clean, mathematical substitution. It is also, in many cases, a total fiction.

The 2:14 AM Reality Check

At 2:14 a.m. on a Tuesday in November, the fiction evaporates. Mike Sorensen is 66 years old, and he has owned his FBO at a mid-sized regional airport for thirty-two years. Outside, a miserable sleet is glazing the taxiways. The phone on Mike’s nightstand rings. It is the flight coordinator for a medevac King Air that needs to pick up a heart transplant recipient.

He de-ices the fuel truck, meets the King Air on the ramp, and stands in the freezing rain while the turbines whine down. He handles the paperwork, ensures the pilot has a coffee, and watches them depart. By 3:45 a.m., he is back in bed.

On Mike’s kitchen table lies a draft of a valuation he received yesterday. It contains a line that reads: “Owner compensation: normalized to market GM salary.” Mike thinks about that line while his feet thaw under the covers. He knows that no General Manager making $145,000 a year is going to answer that 2 a.m. call with the same reflexive ownership. He knows that “market-rate” employees have boundaries, and for good reason.

The Hidden Subsidy of Care

I think about this because I spent last night fixing a toilet at 3 a.m. As a museum education coordinator, my job description involves curriculum development and donor relations, not plumbing. But when the basement of a historic wing starts to flood and the professional service is four hours away, the person who cares the most becomes the person who does the work.

We call this “doing what it takes,” but in the world of business valuation, it is actually a hidden subsidy. The owner is subsidizing the EBITDA by providing a level of service that they would have to pay three different people to replicate.

The industry calls this “Owner Normalization,” but it rarely accounts for the “Owner Paradox.” The paradox is that the smaller the FBO, the more the owner acts as a Swiss Army knife. They are the Chief Pilot, the lead mechanic, the airport board liaison, the janitor, and the fuel farm technician all at once. When a buyer comes in and “normalize” that salary, they are buying a business that appears to have a 20% margin, but that margin is being held together by a founder who doesn’t invoice themselves for their 2 a.m. fuel calls.

The Legacy of the “Fixed Base”

Historically, this has always been the “Fixed Base” in Fixed Base Operator. After the Air Commerce Act of 1926, the federal government began to regulate pilots and mechanics. Before that, aviation was a nomadic, “barnstorming” affair. The “Fixed Base” operators were the ones who stayed put, built a hangar, and became the bedrock of their local airports.

They were, by definition, the people who were always there. The industry was built on the back of the person who lived in the hangar or right down the road. You didn’t buy a service; you bought a relationship with a person who treated the airport like their own backyard.

When we move into the modern era of M&A, we try to turn that backyard into a spreadsheet. We look at the “Adjusted EBITDA” and think we have a clear picture of the cash flow. But if you don’t account for the fact that the owner is the one who handles the delicate negotiations with the Airport Sponsor-the kind of negotiations that happen over a casual breakfast rather than a formal board meeting-you are missing a massive part of the operational cost.

The Silent Expense Creep

If the owner exits and a “market-rate GM” takes over, suddenly the airport board starts looking closer at the lease terms. Suddenly, the medevac flights start going to the airport twenty miles away because the new GM doesn’t do 2 a.m. callouts without a massive overtime trigger. The revenue stays the same on paper, but the expenses start to creep up as you have to hire more staff to cover the gaps the owner used to fill for “free.”

This is why a defensible valuation is so critical. You cannot just slap a GM salary on a P&L and call it a day. You have to look at the “replacement cost” of the owner’s actual utility. If the owner is spending 15 hours a week on hangar maintenance because they like working with their hands, that’s 15 hours of a contractor’s time you have to account for.

Founder Dependency as a Lever

If the owner is the sole person with the technical knowledge to troubleshoot the fuel farm’s antiquated Veeder-Root system, that is a specialized skill set that a standard GM won’t have. Buyers are getting smarter about this. In a competitive diligence process, a sophisticated private equity firm or a national FBO network will look for these “founder dependencies.”

They will ask who answers the phone at night. They will ask who maintains the ground equipment. If they find that the owner is the single point of failure for critical operations, they will use that as a lever to drive down the price, or worse, they will demand a long-term earn-out that keeps the owner chained to the desk (and the fuel truck) for three years after the sale.

When they build a valuation, it isn’t just about applying a multiple to a normalized number. It is about identifying the “invisible labor” and either pricing it correctly or helping the owner transition those responsibilities to a team before the business ever hits the market.

The Pain of Redundancy

Preparing an FBO for sale is often an exercise in making yourself redundant. It is a painful process for a founder who has spent decades being the hero. To get the best price, you have to prove that the business can survive without your 2 a.m. drives in the sleet.

You have to hire the extra line tech, document the fuel farm quirks, and formalize the airport relations. You have to move your salary from “normalized” to “actual,” even if it means the EBITDA looks a little smaller.

The truth is, many owners are afraid to do this. They fear that if they stop being the “unpaid on-call system,” the business will lose its soul, or its margin, or both. And they might be right in the short term. But a business that relies on a 66-year-old in pajamas to stay afloat is not a business; it’s a job with very high stakes.

Institutional Memory vs. Market Rates

I see this in the museum world too. We have “founder-led” galleries where the person who started the collection is the only one who knows which light switches are temperamental and which donors need a handwritten note on their birthday.

“When that person retires, the gallery often struggles because they didn’t realize that the ‘market-rate curator’ they hired doesn’t come with the founder’s thirty years of institutional memory and willingness to fix a toilet at midnight.”

In the aviation world, the stakes are just higher. A missed fuel call isn’t just a lost sale; it’s a delayed life-saving flight. A botched negotiation with the airport sponsor isn’t just a headache; it’s a threat to the ground lease that is the FBO’s only real asset.

If you are an owner looking at a valuation draft today, look past the big number at the bottom. Look at that “Owner Compensation” line. Ask yourself: if I vanished tomorrow, how many people would I have to hire to do what I did last week? If the answer is “more than one,” your valuation is built on a foundation of sand.

Normalization as an Act of Honesty

Normalization should be an act of honesty, not an act of erasure. It should acknowledge the extraordinary effort the founder has put in while being realistic about what it takes to sustain that effort under new management. Only then can a buyer and a seller agree on a price that reflects the true value of the operation, rather than a fictionalized version of it.

The next time you’re out on the ramp in the middle of the night, or the next time you’re handling a tenant dispute that no GM would touch, remember that those moments are the “hidden equity” of your business.