How to Reduce Owner Dependence

A recent article from Axial entitled “How to Reduce Owner Dependence Before a Sale” discusses four strategies to decrease how active an owner is in the business before going to market. When a business is very dependent on any one particular person, it increases the potential risk that a new owner is taking on. Therefore, by improving the business’s ability to run without the owner present before going to market, you can increase the number of potential buyers and possibly the value of your business.   Below are a few suggestions to help mitigate the risk of owner dependence:

• Make moves well in advance of the desired sale
• Bring in an independent board
• Build out the management team
• Document key information

Working closely with a professional business broker is the first step in evaluating the areas of your business that need to be addressed before marketing it for sale. Get a handle on owner dependence and other risks that a buyer may discover during the due diligence process by beginning the process well before it’s time to sell.