M&A Advisor Tip: Avoid key-man risk

Business owners should ask themselves, if I became incapacitated, could my business run without me? If the answer is no, buyers will be concerned about the business’s ability to operate when you’re gone.

If you can’t get away for at least a week of vacation at a time… if you hold key customer relationships… if you’re solely responsible for an essential business function… buyers will see risk, and rightly so.

To get the most value in a sale, you need to build a business that can operate without you. Better yet, try to eliminate key-man risk throughout the organization so that business operations can continue no matter who gets sick or quits unexpectedly.

For advice on exit planning or selling a business, contact Al Statz, CEO of Exit Strategies Group, Inc., at alstatz@exitstrategiesgroup.com. Exit Strategies Group is a partner in the Cornerstone International Alliance.