secure moneyMATH

Owner Dependency

Owner dependency is the single biggest value discount in small business sales. If clients hire the founder personally (not the firm), if only the owner can deliver the service, or if the business would lose significant revenue during a 3-month owner absence, the business has high owner dependency. Buyers discount for this because they're taking on transition risk. The fix: document SOPs, delegate client relationships, automate operations, and build systems that run without you.

Example

A consultant billing $200K/year who IS the entire business has high owner dependency (1.5x–2.0x multiple). The same revenue in a firm with 3 consultants who own their own client relationships might get 2.5x–3.0x.

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