Capittal's view: how to sell a company that depends on the owner

Quick answer

Capittal's view is that a company which depends on its owner does sell, but the buyer will not pay at closing for something that only works while the owner stays in his chair. Founder dependence does not break the deal: it moves price from closing into the future in the form of earn-out, holdback and continued involvement, and that shift is corrected by working on the previous 12-18 months.

How does a buyer detect that the company depends on me?

The buyer does not ask in the first meeting. It checks during due diligence with four specific tests.

• Who signs. It reviews powers of attorney, delegated authorities and who approves payments, contracts and discounts above a given amount.
• Who sets prices. If every meaningful quote goes through the owner, the commercial criterion is not written down anywhere.
• Who customers call. It asks for emails and CRM records from the top ten accounts and looks at whose name appears in each thread.
• Who suppliers talk to. It looks for terms and discounts agreed verbally that no contract records.

The most expensive signal is the concentration of the commercial relationship in a single person. If the owner is the point of contact for the customers that deliver most of the margin, the buyer assumes it is buying a customer base with an expiry date. That is where price is lost, not in EBITDA.

Which areas does the dependence sit in and what do I do about each one?

Founder dependence is almost never general. It concentrates in four areas and each one is worked on differently.

Order matters. Commercial dependence is the one that moves price the most and takes longest to correct, so that is where you start.

Are delegating and documenting the same thing?

No. Delegating is ceasing to decide. Documenting is writing down the criteria by which decisions are made.

An owner can delegate the signing of orders and still be indispensable, because the team calls him before signing. And he can document the pricing criteria without delegating anything, because he still approves every exception. The buyer needs both and buys the combination.

The practical test is simple: if the owner is away for two weeks with no phone, which decisions stop? The ones that stop point to what needs documenting. The ones that are taken badly point to what needs delegating with written criteria.

What is a genuine second tier of management and why does a buyer pay for it?

A genuine second tier of management is two to four people who decide without checking first, run their own budget and answer for a measurable result. An org chart with job titles is not a second tier.

• The customer knows who to call and calls them, without going through the owner.
• Each one has a written scope of decision-making and their own spending limit.
• Their variable pay is tied to an indicator the buyer can audit.
• They can contradict the owner in a committee and the committee settles it on the merits, not on hierarchy.
• Their contract has stable terms and does not rest on a verbal agreement with the founder.

The buyer pays for that team because it reduces the risk that year two's cash does not look like year zero's. A fund needs someone to execute the business plan once the seller has gone. A strategic buyer needs someone to hold the customer relationships together during integration. In both cases, the second tier is what makes it possible to argue for a larger payment at closing.

How does the deal structure change if the company depends on me?

It changes across four variables at once. These ranges are the practical criteria Capittal negotiates these deals with, not a market data point.

The operating conclusion is that dependence is not discounted from the headline price. It is discounted from how much of that headline actually reaches the seller's account.

Should I step back from the business during the process to show it works without me?

No. Overplaying your exit is the most expensive mistake at this stage.

An owner who disappears abruptly in the middle of the process produces two simultaneous effects. Sales suffer in precisely the months the buyer will analyse in most detail, and customers notice the change and ask about it. A buyer that spots a drop in activity during due diligence renegotiates price, and that renegotiation lands at the worst possible moment at the table.

The handover is made visible and gradual. The owner stays present, introduces the new contact, takes part in the first meetings and steps out of the thread afterwards. What the buyer wants to see is not the founder's absence, but a handover already under way and delivering results.

When is the transition plan negotiated, before or after the LOI?

Before. The transition plan is closed at the offer stage, not in the sale and purchase agreement.

When the seller's continued involvement is discussed after signing the LOI, the seller negotiates with no alternative. The buyer already has exclusivity, the competitive process has closed and every extra month of involvement it asks for costs it nothing. The length of that involvement, the time commitment required, the pay for that period and how much of the earn-out depends on it are price variables and they are negotiated while there is still more than one buyer at the table.

That is why in a well-run process the involvement is already specified in the indicative offer. It is the moment when a buyer that wants to win the deal accepts terms it would not accept later.

What is the next step if my company depends on me?

The first step is to measure the dependence before deciding when to go to market. At Capittal Transacciones we prepare a confidential valuation that includes an analysis of customer concentration, a review of who decides in each of the four areas and an estimate of how that dependence would affect the deal structure.

With that diagnosis you decide what matters: whether to open the process now or spend 12-18 months turning personal knowledge into a transferable asset. We are a mid-market M&A boutique specialising in deals in the 3 to 250 million euro range, with eight offices in Spain and our head office in Barcelona, and the analysis is done directly by the partner who would run the deal.