Owner Dependency
How do you tell if a business runs without its owner?
No management salaries on the P&L. A thin org chart. The owner holds the only license, the key relationships, and the know-how.
What to ask for
Suspecting a flag is not the same as verifying one. These are the documents and signals that turn a hunch into a decision.
- The org chart with actual salaries, including whether anyone is paid to manage.
- Who personally holds the licences, bonds, and certifications.
- Who the top ten customers call when something goes wrong.
- The owner's calendar for a normal week, not a described week.
The question to ask the seller
“Walk me through a normal week. What do you personally do that no one else can? How long would a new owner need you?”
Ask it in those words. A seller who answers straight is telling you something. A seller who dances is telling you more.
If the business is the owner, you are not buying a business. You are buying a job with debt attached. Put a market-rate manager into the model before you value anything, and watch what happens to the earnings you are paying a multiple on.
A transition agreement with real obligations and a real term. A documented handover of every relationship. A number two identified, compensated, and retained before closing rather than recruited after it.
If the business is the owner and there is no number two, walk, or price it as the job it actually is.
Travels with
Flags that show up together.
Screening one of these usually turns up the others. They share a cause more often than they share a coincidence.
Every deal you read gets safer.
The flags live in the community, applied to real deals every week. Membership is complimentary.
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