Most often an Owner starts or acquires a company because the industry is something they’re skilled in and (hopefully) enjoy. As their team and Sales grow, too often they themselves work more and more in the business and do not delegate their management responsibilities as Founder. Waiting until they’re ready to sell before thinking about succession and this delegation is a costly mistake. Heavy “Owner centricity” or “Owner reliance” prevents them from working on the business and is unattractive to Buyers. Delegating management isn’t just about lightening the Owner’s load—it’s about proving there is transferrable value – value Buyers will pay for.
As their M&A Advisor, it’s our responsibility to do more than just point this out and deliver a below-expectation Most Probable Selling Price. At the same time, it is a disservice to overpromise the MPSP while knowing Buyers (and Appraisers) will uncover heavy Owner reliance and discount heavily. So how do we help them?
The first step is educating Owners. One approach is drilling down to the range of comparable sales for similar companies. How can two similar size companies in the same industry sell for such different Sales and Cash Flow multiples? It’s very likely the different level of Owner reliance between them.(1) An Advisor can also get into the weeds (not usually recommended) of the company-specific Risk Premium in their Discounted Cash Flow or the Manager’s Salary and ROI in the Buyer’s Test valuation approaches. An Owner may be most understanding though of the statement “Consider a Buyer’s perspective. No one risks their own money to buy a risky small business and work 60 hours per week—not without the Seller sharing a lot of risk”. Here’s why:
When a Buyer evaluates a business, they’re not just looking at revenue and profit margin. They’re asking: Can this business run without the Owner? If the answer is No, the Buyer sees a risky operation, overly dependent on one person. That means:
On the other hand, delegation shows that a business is more than the Owner’s personality. It tells buyers, “This company is built to last”. By the way, this is an opportunity to introduce earnouts and seller financing.
There is still time to make improvements. According to IBBA(2) sales of main street and lower middle market businesses take 6 to 10 months from engagement to close. Additionally, Owners are usually asked to stay on in some capacity–we see an average of 3 to 6 months. If we’re providing Sellers a realistic timeframe, they learn that selling today means being active for at least another year. So start delegating and increasing that transferable value now. The longer the runway, the more delegation they can accomplish.
An Owner doesn’t need to overhaul the org chart overnight. Here’s how to begin:
We provide the ExitMap® Management Succession Worksheet, so Owners can repeat this process over time with more responsibilities. When they do, the company specific risk premium decreases, the MPSP rises toward the higher end of the range for the industry, and the Owner will sell at a higher price on better terms.
This is the most common objection we hear—and it’s understandable. Owners pour their heart into their business. They know every client, every quirk, every shortcut. But here’s the truth: Clinging to control stalls the exit, and delegation doesn’t mean disappearing. It means building an empowered team to execute the mission statement. It means training others to succeed, so the Owner can succeed at stepping away.
This is a good mindset for an Owner beginning to plan their exit. We all agree that growing Sales and margins are important to both finding Buyers and valuation, but we’ve all also received inquiry after inquiry from Buyers searching for a business they can grow. We contend that in nearly all cases the gains from delegation, when done methodically and monitored, far outweigh the losses from marginal productivity of the Owner just putting in more hours. Again, consider how heavy Owner reliance affects the valuation, shrinks the pool of interested Buyers, and reduces the likelihood the company will ever sell at all.
We tell clients this: The best time to start delegating was years ago, and the second-best time is now. If you’re thinking about selling your business in the next 1–3 years, start preparing today. Delegation isn’t just a management strategy—it builds and proves value that enables Owners to exit from a position of strength.
TJ Sainsbury, CBI, CEPA
[email protected]
(1) Stratford Analytics. (2025). The working owner discount: Why owner dependence erodes manufacturing valuations and how to fix it. https://www.stratfordanalytics.com/wp-content/uploads/2025/12/The-Working-Owner-Discount.pdf
(2) International Business Brokers Association, & M&A Source. (2025). Market Pulse Q2 2025 Executive Summary
IBBA Magazine
IN THIS ISSUE: “Building the Future of Our Profession, Together” Letter from the 2026 IBBA Chair. Plus, The Human Factor, Delegation of Management, Blind Spots in Main Street, and More!
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