The buy-side Quality of Earnings firm is attempting to wipe out our EBITDA adjustments for the owner-operator salary replacement, claiming our proposed replacement salary is too low for our market. How do we defend this adjustment using our Accountability Chart and clear GWC™ seats?

Question

Tyler Smith · Accepted Answer

Buy-side Quality of Earnings teams look for any opportunity to claw back EBITDA adjustments to lower the final purchase price. Their favorite target is the owner's salary add-back. They will claim that replacing you will require a high-priced executive, reducing your normalized EBITDA and your valuation.

You can shut down this argument by pointing directly to your Accountability Chart. Do not let them treat your exit as a single, massive vacuum. Show them how your business actually runs. Your Accountability Chart should prove that your responsibilities are already distributed among your leadership team.

If you are operating as the Visionary, show them that your Integrator is already running the day-to-day operations. Use the GWC™ tool, showing that your current team gets, wants, and has the capacity to do their jobs without your daily intervention. Show the buy-side analysts that you are not replacing a full-time, hands-on CEO; you are replacing a part-time strategic resource.

Provide local salary survey data for the specific, narrower seats that you actually occupy. If your Integrator is already handling eighty percent of the traditional CEO duties, the cost to hire a replacement for your remaining responsibilities is minimal.

By presenting a documented Accountability Chart and proving your leadership team runs the weekly Level 10 Meeting™, you demonstrate that the business is institutionalized. This solidifies your owner salary add-back, defends your EBITDA, and keeps your valuation intact.