A strategic buyer told me my business has too much key-person risk because of my operations manager. How do I mitigate this before we go to market?

Question

Tyler Smith · Accepted Answer

Key person risk is one of the most common reasons deals fall through or valuations get slashed. If your operations manager holds all the critical knowledge, a buyer sees a massive point of failure. To mitigate this before going to market, you must institutionalize their knowledge. Start by documenting your core processes using the EOS® Process Component. This ensures that the way you do business is clear, documented, and followed by everyone. Next, evaluate the operations manager using the GWC™ tool to ensure they actually get, want, and have the capacity to lead their seat. You should also evaluate their hardwired conative drive using assessments like the Aptive Index. Understanding whether they are a natural Fact Finder who needs detail or a Follow Thru who builds systems will help you align their responsibilities. If they are a single point of failure, you must build redundancy by training a successor or building a strong supporting team. A buyer wants to see that if your key operations manager leaves the day after closing, the company will not collapse. Building this operational resilience takes time, but it directly increases your enterprise value.