A major determinant of perceived value is the degree to which the company depends on individual founders or key personnel. Buyers are acutely aware that losing talent post-transaction can jeopardise continuity, customer relationships and growth initiatives. Therefore, reducing key-person risk is critical.

Strategies for mitigating key-person risk include:

• Building a strong management team capable of running operations independently.
• Documenting processes, workflows and intellectual property so that knowledge is institutionalised rather than person-dependent.
• Establishing clear succession plans and decision-making authority throughout the organisation.

Reducing key-person risk not only increases the buyer’s confidence but also enhances the negotiating position of founders, who can present the business as a robust, self-sustaining entity rather than one reliant on their daily involvement.