Chapter 8: Building a Management Team Buyers Trust

Can my business run without me?

What sellers often miss

Many business owners believe buyers are purchasing their expertise, reputation, and relationships. While buyers certainly value those attributes, they become concerned when those assets are not transferable. What makes you indispensable as an owner may be exactly what causes a buyer to discount value.

The takeaway

If you want to increase the value of your company, start making yourself less critical to its daily operation. Empower your management team. Develop future leaders. Document key processes. Broaden customer relationships throughout the organization. The easier it is for a buyer to envision success without you, the more valuable your business becomes.

Figure from Building a Management Team Buyers Trust. Both deals carry the same headline, but a thin bench pushes the money into contingent, owner-tied structure. — Both deals carry the same headline, but a thin bench pushes the money into contingent, owner-tied structure.

Illustrative, not your deal. Where the book uses dollar figures, they are there to show how something works, not to describe your business. Your banker, your accountant, and your attorney will put real numbers to your own situation. Full note.

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Rule 8

The less the business depends on you, the more it is worth.