I am looking at this great business. Ticks all the boxes with strong, regular revenue secured by contracts, constant new business, high margins, a fragmented industry and room for amalgamation into one dominant player,, everything looks great. It is also just the right size for the ETA model and I see a path of growth to at least get it to the PE size.
One big issue is that the owner plays a very big role in the day-to-day operations of the business. and the industry also requires some specialised professional certification, which only the owner has. I am not sure how big of a role this play in the success of the company. Your thoughts on how to tackle this one...?
Owner dependant business, how to mitigate that risk.
by a searcher from Gordon Institute of Business Science, University of Pretoria
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If a certain certification is needed, are you able to get it? If not, how easy is it to hire someone with it? Is there enough cash flow to support hiring that specialized person?
Unfortunately, if being able to operate is dependent on hiring someone with a specific certification who is not a co-owner, that's another risk (person can leave/quit etc.)
Really analyze the cash flow and the industry to see what's possible.
Good luck.