This describes the situation when a the firm is being sold to a group and the departing owner needs to be replaced, but at a higher cost. This is considered a management replacement cost.
This describes the situation when a the firm is being sold to a group and the departing owner needs to be replaced, but at a higher cost. This is considered a management replacement cost.
Example, if the departing owner's W2 and Benefits total equals $75,000, but their role and responsibilities need to be assumed by someone else that earns $125,000, you would need to subtract an additional $50,000 from the cash flow a buyer would realize. In this instance, you would enter $-50,000 in the W2 Owners and Benefits Addback field.