Can you sell a business that depends on its owner?

Q: How does it change the terms?

Often more than the price. Buyers protect themselves by: • paying part of the price later, and only if the business hits targets; • asking you to lend them part of the price and wait to be repaid; • holding back part of the price until certain things are confirmed; • asking you to stay on for two or three years. Each one means you’re still carrying the risk after you’ve “sold”. The details belong with your broker, lawyer and accountant.

The short answer

Often yes, but rarely on the terms you’d hope for. A buyer has to allow for the business slipping once you leave. That usually means a lower price, part of the price paid later, or a demand that you stay on. If the business can’t operate at all without you, it may not sell.

How does it change the offer?

Buyers pay for what they expect to keep. If your profit depends on your relationships, your judgement or your licence, they assume some of it will leave with you. The same profit is worth less when it’s tied to a person than when it’s tied to a business.

How does it change the terms?

Often more than the price. Buyers protect themselves by:

paying part of the price later, and only if the business hits targets;
asking you to lend them part of the price and wait to be repaid;
holding back part of the price until certain things are confirmed;
asking you to stay on for two or three years.

Each one means you’re still carrying the risk after you’ve “sold”. The details belong with your broker, lawyer and accountant.

When can’t a business be sold at all?

When the business is the owner. If the licence it needs is yours alone, if every customer relationship is personal, or if nobody else can do the core work, many buyers can’t take it on.

Who buys a business that depends on its owner?

Often a competitor who mainly wants the customer list. That can mean your name and some of your people don’t carry on after the sale. If you care about your team and your name, that’s worth thinking about early.

What gives me better choices?

Making the business run without you before you put it up for sale. It gives buyers less to worry about, and gives you options that aren’t about selling at all. See your options.