Develop a business that can thrive without you

If you’re aiming to get your business fit for sale, here’s a crucial question: can it cope without you? If not, you may be exposed to key person risk. That’s when the business is overly reliant on one person – most often the owner or founder. When they leave, they take with them mission-critical information, capabilities or contacts. It’s a red flag for prospective buyers. During diligence, they’ll be looking for evidence that your business has transferable value, and is capable of continued growth and success under new ownership or management. Even if you’re planning to stay involved with the business for some time after it’s sold, key person risk can complicate the transfer process and have an impact on valuation. At worst, it can be a deal breaker. Here’s how you can overcome it.