Guide
The business that needs you is worth less
Make yourself less necessary before you sell.
Buyers with the deepest pockets want a business that runs without the owner. If every customer still calls your cell, start there, two or three years before you sell.
General information only. Not valuation advice.
Why owner dependence costs you
Private equity groups and family offices usually want a manager in place, recurring revenue and no single customer that makes up a big share of sales. If the business depends on you for sales, key relationships or day-to-day decisions, the buyer is taking on a risk: what happens when you leave? They pay for that risk with a lower price, more of the price paid later, or a longer stay for you after the sale.
Where to start
- Write down what only you know: pricing, suppliers, the big accounts, how jobs get quoted.
- Hand a few key customer relationships to someone on your team, and let them own them.
- Hire or promote a manager, and give them a year to show it works.
- Get your books to the point that someone else could read them without you in the room.
- Take a two-week holiday and see what breaks.
What this does for the numbers
A business that needs you can still sell. It tends to sell to individual buyers who are buying a job as well as a business. A business with a team in place opens the door to buyers who look at bigger deals and different terms. See what moves a price and preparing to sell.