Bill Canady explains that owner dependency is the biggest discount buyers apply when valuing a business. If your company can't run without you, buyers will pay less even if your EBITDA and customers match a comparable business that doesn't depend on its owner.
The single most reliable discount a buyer applies to a middle market company is owner dependency. If they can't do it without you, you're gonna get paid less. The owner trap is the single most expensive problem in middle market company. Not a soft quarter, not a customer concentration, though that one costs too. Owner dependency. The business runs on one person and a buyer can see it inside about a day and a half. They see it in the org chart. They see it in who answers the hard question. In the management presentation, and they see it when the CFO looks at you before he gives a number. A business that cannot run without one person is worth less than the identical business that can. Full stop. Same EBITDA, same customers, same equipment, different price.
