Two accountants, two numbers, and a franchise that would not wait

The situation

What Besnik and Ha-eun were most afraid of was not losing the deal outright. It was watching the business they were trying to buy quietly lose value while the two sides argued about what it was worth. A five-location franchise resale operation around Barrie, built up over a decade by Ji-ho, does not run itself while a purchase agreement sits unsigned, and every week of delay meant staff turnover, deferred maintenance, and customers with somewhere else to go.

Besnik already owned a mid-sized manufacturing business and had the operating discipline and capital to take on a second venture. Ha-eun, his wife and a dentist who owned her own practice, brought a similar comfort with running a regulated, staff-heavy operation. Together, as a couple pooling two successful careers into a joint acquisition, they had agreed with Ji-ho on a purchase in the five to eight million dollar range for the franchise group, pending final valuation, and both sides retained their own accountants to confirm the number before the agreement was finalized.

The two accountants did not agree. Ji-ho's accountant valued the business using an earnings multiple, capitalizing several years of adjusted operating income at a multiple typical for franchise resales of this size, which produced a figure near the top of the agreed range. Besnik and Ha-eun's accountant took an asset-based approach instead, valuing the equipment, leasehold improvements, and inventory across the five locations and arriving at a figure noticeably lower, closer to the bottom of the range.

Neither approach was wrong in the abstract. Earnings multiples are the standard way to value an established, profitable operating business, because they capture what the business actually generates rather than what its physical assets happen to be worth. Asset-based valuation matters more for a business whose value sits mostly in tangible property rather than ongoing operations. The disagreement was really about which description fit this franchise group, and neither accountant was going to concede the point to the other without something more than their own opinion to argue from. Meanwhile the five locations kept operating, and Besnik and Ha-eun could not put their own attention, or their own businesses, on hold indefinitely while the dispute worked itself out.

That pressure was not abstract for either of them. Besnik's manufacturing business ran on production schedules that did not pause for a negotiation happening on the other side of town, and Ha-eun's dental practice needed her chairside several days a week regardless of what the franchise valuation dispute required. Every hour spent reviewing competing accountant reports was an hour taken from businesses that were themselves generating the wealth funding this acquisition, which made an efficient path through the disagreement a practical necessity, not simply a preference.

What the documents showed

Rather than treating the two valuations as a standoff to be split down the middle, we asked both accountants to produce the underlying working papers behind their figures, not just the summary conclusions. What those documents showed was that the disagreement was not really about methodology in the abstract. It was about which of the five locations should be treated as part of an established, stable earnings base and which should be treated closer to their asset value because their financial performance was too recent or too volatile to rely on.

Two of the five locations had operated for the full ten years and showed consistent, predictable earnings, the kind an earnings multiple is built to capture. The other three had been added in the last three years through smaller acquisitions Ji-ho had made, and their financial records showed real volatility, one location in particular had swung from a loss to a strong profit year over year as a new manager settled in. Ji-ho's accountant had applied the earnings multiple across all five locations uniformly. Besnik and Ha-eun's accountant, reacting to that volatility, had gone the other direction and stripped out earnings entirely in favour of asset value across the whole group, which undervalued the two stable, long-running locations that plainly belonged on an earnings basis.

Both accountants, in other words, had built a defensible method and then applied it too broadly. The lease documents, staffing records, and location-by-location financial statements, once actually compared side by side, supported a hybrid picture: an earnings-based value for the two mature locations and a more conservative, blended figure for the three newer ones where the track record was still thin.

This mattered practically because it gave Besnik and Ha-eun something to negotiate from that was not simply their accountant's word against Ji-ho's. It also mattered because the franchise agreements themselves, reviewed alongside the financials, showed that two of the newer locations carried renewal terms coming up within the following two years, adding a further reason not to value them as confidently as the established locations regardless of which valuation method was used.

We also asked both accountants to model what a delay would cost. A franchise group generating steady cash flow does not simply sit still while lawyers and accountants argue; staff turnover accelerates when a sale drags on and employees hear rumours, marketing spend gets deferred, and equipment maintenance that a confident owner would authorize gets pushed back by a seller focused on an unresolved negotiation instead. Putting a rough figure on that erosion, even a conservative one, gave both sides a shared incentive to resolve the valuation question quickly rather than treat the disagreement as something that could be litigated at leisure.

What we did

1. Requested full working papers from both accountants rather than accepting the headline figures, because a valuation dispute cannot be resolved by comparing two conclusions when the real disagreement lives in the assumptions behind each one. Two numbers with no visible reasoning behind them just invite a standoff; the working papers are what let a negotiation actually engage with why the figures diverged.
2. Broke the valuation down by location instead of treating the five-store group as a single unit, which let us identify that the dispute was really about how to treat three newer, more volatile locations differently from two mature, stable ones, rather than a genuine disagreement over which valuation method was correct in the abstract. Broken apart this way, the two accountants agreed almost entirely on the two mature stores; the gap sat inside the newer ones.
3. Cross-referenced the franchise agreements for each location against the financial records, flagging the upcoming renewal terms on two of the newer stores as a legitimate reason to discount their contribution to the overall figure, regardless of which valuation method applied to the rest of the group, since a franchise agreement nearing renewal carries its own uncertainty independent of past earnings.
4. Modelled the cost of continued delay in rough, conservative terms, and shared that figure with both sides directly, which shifted the tone of the negotiation from a methodological standoff over whose accountant was right to a shared problem both parties had a genuine, quantified interest in resolving quickly rather than arguing indefinitely. Putting even a conservative figure on the erosion meant every extra week of disagreement now had a visible cost both accountants could see.
5. Proposed a hybrid valuation framework to Ji-ho's counsel, applying an earnings multiple to the two established locations and a blended earnings-and-asset approach to the three newer ones, giving both accountants a structure they could each defend to their own client rather than a compromise either would have to abandon their methodology to accept. Presenting it as a synthesis of both approaches made it easier for each accountant to sign off.
6. Kept the operating business separate from the negotiation by agreeing interim reporting terms with Ji-ho, so Besnik and Ha-eun could see monthly figures for all five locations while the valuation talks continued, protecting the deal from deteriorating quietly in the background while both of them kept their attention on their own businesses. Neither Besnik's production schedule nor Ha-eun's patient list could pause for months of valuation talk, so the reporting terms watched the deal for them.
7. Negotiated the final price within the gap between the two original figures, landing closer to the buyer's number given the legitimate volatility concerns but still acknowledging the strength of the two mature locations that Ji-ho's accountant had been right to value more highly. Neither figure won outright: a number both accountants could explain to their clients was more durable than one either side resented.
8. Documented the valuation methodology in the purchase agreement itself, so that if a post-closing adjustment dispute arose later, both sides would be working from the agreed hybrid framework rather than relitigating the whole valuation question again from scratch with a fresh pair of dueling accountants. Writing it down, rather than leaving it as an understanding between the two accountants involved this time, meant it would still hold once neither of them was still engaged.

The outcome

The deal closed at a price roughly in the lower third of the original five to eight million dollar range, a genuine compromise that neither accountant's original figure fully supported and neither side treated as a clean win. Besnik and Ha-eun paid more than the pure asset-based valuation had suggested, reflecting the real earning strength of the two mature locations. Ji-ho accepted less than the earnings-multiple figure had projected, conceding that the three newer locations could not be valued with the same confidence as the established ones.

The interim reporting arrangement did what it was meant to do. Because Besnik and Ha-eun had visibility into monthly performance across all five locations throughout the negotiation, the business did not quietly deteriorate while the valuation dispute ran its course, and neither side felt pressure to rush a bad number just to stop the clock. That mattered more to the eventual deal than either accountant's methodology, because a stalled negotiation with no visibility is what actually erodes a business's value, not the negotiation itself.

Both accountants, notably, ended the process agreeing that the hybrid approach had been the right way to value a franchise group with locations at such different stages of maturity, even though neither had proposed it independently. Besnik and Ha-eun took over the five locations with a valuation methodology written into their agreement that will apply again if either side ever needs to revisit the price, sparing whoever inherits that argument from starting from zero.

For Besnik and Ha-eun, the practical relief was as significant as the price itself. The interim reporting terms meant neither of them had to choose between managing the negotiation and running their own businesses during the months it took to close, which was the outcome they had been most anxious about from the start. Ha-eun said afterward that seeing the monthly figures throughout the dispute, rather than waiting for a final number at the end, was what let her trust the eventual compromise instead of simply hoping it was fair.

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