SMB MANUAL | Issue 033 | November 2026

WELCOME TO THE WEEK

Today’s SMB Manual examines how buyers assess a business’s dependence on its owner, why being available for every call can signal a problem, and how to prepare the business to run smoothly during a week away.

— THE LEAD

You have booked your first full week off since 2019. You plan to sell your business in about two years, and a broker has asked what happens when you are away. The honest answer is that customers call your cell phone, crew leads text you before quoting any job over $2,000, and you approve payroll even when you are on holiday.

Buyers pay attention to this. BizBuySell’s third-quarter report says businesses with strong cash flow, clean financial records, and limited dependence on the owner continue to attract strong buyer interest. Fred Petito, a broker with Transworld Business Advisors in New Jersey, told BizBuySell that buyers are wary of businesses that depend heavily on their owners, particularly those with thin margins or high fixed costs.

A buyer who identifies this dependence has three ways to reduce their risk. They can offer a lower purchase price. They can structure an earnout, paying part of the price later if the business meets agreed performance targets. Or they can require a longer transition period, keeping you involved to transfer customer relationships. Each option increases your post-sale exposure. SRS Acquiom’s 2026 report on lower-middle-market transactions found that 35% of deals with closing payments of $25 million or less included an earnout.

Many owners have done little to prepare. In the Exit Planning Institute’s 2023 survey of 1,162 owners, 75% wanted to exit within 10 years. Yet only 42% had a written transition plan, and 57% felt very comfortable with their management team taking over. EPI estimates that a business accounts for 80% or more of a typical owner’s net worth.

A common mistake during that first week away is checking in every morning and responding to every message. Your involvement may help resolve immediate problems, but it also demonstrates how much the business depends on you. Consider a company generating $500,000 annually in seller’s discretionary earnings (SDE), which includes profit and the owner’s compensation. A buyer might offer 3x SDE, or $1.5 million, with $400,000 structured as an earnout based on sales after you leave. If sales decline once you leave, that $400,000 could be at risk.

Buyers who overlook this dependence can face serious problems after closing. In mid-2018, Scott Duncan acquired F&M Tool and Die, a Massachusetts business that manufactured and repaired injection molds, for approximately $3.6 million. The purchase price represented about 3x its 2017 EBITDA (earnings before interest, taxes, depreciation, and amortization) of $1.2 million on $4.2 million in revenue. Duncan financed the acquisition with 10% investor equity, a 10% seller note, and an SBA 7(a) loan covering the balance.

The seller had little involvement in daily operations. However, he continued to take customer calls from the golf course and advise them on their molds. Duncan later discovered that customers had built relationships with the seller personally, rather than with the business. Within a month of the acquisition, a key employee departed and took a customer with him. That customer represented 10% to 15% of revenue but approximately half of EBITDA. Duncan eventually closed the business roughly seven years after acquiring it.

Start preparing for your week away a month in advance, and inform employees and important customers of your absence. Identify the 10 decisions you handle most frequently. Assign responsibility for each decision and establish spending limits, such as $5,000. Define the circumstances that justify contacting you, such as a safety incident or the potential loss of a customer. Otherwise, leave your phone switched off.

When you return, have a manager prepare a one-page summary of the week. Review every decision that had to wait for your return. Address those areas before selling. Repeat the exercise annually, and keep the summaries as evidence the business can operate independently.

If your business cannot operate for a week without you, buyers will factor that dependence into their offers.

— WHAT WE’RE READING