Management Services Organization Valuation

A management services organization valuation determines whether the fees a related management company charges a practice or business are consistent with what independent parties would pay, under IRC §482.

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At a glance

Basis: IRC §482 and Revenue Ruling 59-60
Prepared by: A credentialed FMV valuation analyst
Deliverable: Signed report (PDF)
Used by: Accounting firms
Delivered to: The ordering bank's or firm's vault and the client's vault

When it is needed

A professional practice pays a related management company for services.
A private equity platform sets fees between an MSO and affiliated practices.

What the report contains

Market comparison from proxy and survey data, scaled to company size
Replacement cost floor and capital return test
Signed memo for the file

Last updated October 24, 2026

Who uses it

Accounting firmsMSO structures are common in medical, dental, and professional practices. The memo supports the fee on the return and in diligence.

Standards and sources

IRC §482: Allocation among related parties
Treas. Reg. §1.482-9: Services transactions

Documents we need

Payroll records
Summary of duties and hours
Financial statements
Service agreements

How an engagement works

Scope
We confirm the purpose, standard of value, valuation date, and addressee, then issue the engagement letter.
Intake
You or your client upload documents against a checklist. Open items stay visible until the file is complete.
Analysis
A credentialed analyst prepares the valuation and signs the conclusion.
Delivery
The signed PDF goes to your vault and your client's. We keep the workfile for later questions.

Management services organization valuation questions

What is a management services organization valuation?

A management services organization (MSO) valuation determines a reasonable fee for the management services an MSO provides to a related practice or business. FairMarketValue (FMV) applies market, cost, and income approaches under IRC §482 and signs a memo for the file.

Why must a related-party management fee be supportable?

Under IRC §482, the IRS can reallocate income between related parties when their arrangements are not consistent with arm's-length terms. A documented fee study supports the deduction on the return and in diligence.

Do healthcare MSO arrangements have additional fair market value rules?

Often. Healthcare arrangements may also need to be consistent with fair market value under federal fraud and abuse rules. Counsel determines which rules apply, and the FMV study documents the fee analysis they rely on.

What documents does an MSO fee valuation require?

An MSO fee valuation requires payroll records, a summary of the services and hours, financial statements, and the services agreement.

How is the fee for a management services organization valuation set?

FMV quotes the fee for a management services organization valuation after reviewing the scope. The fee is fixed before work starts and does not depend on the conclusion of value.