This is one of the most common deal killers: The owner is still the business.
Yes. As an owner you play a massive role in your business, but the business shouldn’t run through you.
Buyers see risk when revenue, relationships, and decisions are all owner-dependent. A business like this simply isn’t scalable.
This week’s newsletter focuses on how to break that pattern and start to build a company that runs without you.
We’ll cover:
- 3 insights on why owner dependency hurts deals
- 2 frameworks to reduce risk
- 1 action step you can take this week
3 Insider Insights About Owner Dependency
1. Overreliance on the owner is one of the top deal killers.
When a founder is still the primary rainmaker, buyers see immediate risk. If the owner leaves, what happens to revenue? From my professional experience I have seen it drop or disappear.
This both limits the buyer pool and can have a negative impact on your valuation. Sophisticated buyers know they’ll have to either keep the owner tied up in an earnout or invest heavily to rebuild the infrastructure.
2. Owner dependency leads to longer transition periods and higher earnouts.
If buyers believe the company can’t run without the founder, they’ll push for terms that keep the owner around longer. This usually means tying compensation to future performance or extending the transition period.
For you (the seller), this undermines the very goal of an exit. Instead of walking away clean, you may find yourself back in the trenches – often under someone else’s control. What looked like a big payday becomes a slower, riskier path.
3. Buyers want to see recurring revenue that isn’t tied to personal relationships.
Revenue built solely on the owner’s relationships is fragile. Buyers know customers might leave once the founder does.
That’s why recurring revenue, contracts, and diversified customer bases are so valuable. They signal stability that isn’t dependent on one person.
2 Frameworks To Consider
The Goat System
Most founders are the best at what they do. To use a sports analogy they are the GOAT (greatest of all time) at their role in running their business. The challenge is that much of this knowledge lives only in their head.
The Goat System is about taking what makes the owner great and building it into a repeatable process. This means documenting key processes and practices so they can be taught to others.
The Pipeline Health Check
A strong sales pipeline is one of the clearest signals that a business is not owner-dependent.
The Pipeline Health Check asks four simple questions:
- Do you have a consistent backlog of work?
- Are opportunities qualified against set criteria?
- Is each deal assigned a weighted probability?
- Do forecasts match actual results?
If the answer to these questions is yes, it means the business has a scalable sales process that doesn’t depend on the owner’s intuition.
List Of Our Completed Transactions
1 Action Item This Week
Document your key processes.
If they only exist in the owner’s head, they don’t exist. Write down the steps, criteria, and handoffs for all key processes in your business.
This simple exercise is the first move toward reducing dependency.