Succession & Structure
A business without a succession plan is a business with a dependency that every buyer can see.
Key-person risk is the term buyers use for the question: what happens if this person leaves? When that person is the owner - the one who holds the client relationships, makes the strategic calls, and is the face of the business to the market - the risk is significant.
There are two dimensions to succession readiness: who leads the business, and whether the corporate structure supports a transition.
The leadership question is the harder one. It requires identifying who could run this business, developing them in that direction, giving them visibility and authority, and gradually stepping back in a way that the team and the market can absorb. This is years of work, not months.
The structural question is more tractable. Corporate structure, shareholder agreements, employment agreements, customer contracts, IP ownership - these are things that can be reviewed, identified, and addressed with the right advisors.
Both dimensions matter. A business with a strong successor and a clean structure is a fundamentally different proposition for a buyer. The former commands better terms and moves through a transaction process faster. The latter creates uncertainty - and uncertainty is always priced.