A buyer checks the assets, the contracts and the accounts, and misses the main thing: how much of the business will walk out with the former owner a month after completion. Here is how to see that in advance.
What usually rests on the owner
Customers. In services and in make-to-order manufacturing the decision to work with you is often personal: the client deals with a person, not with a legal entity.
Suppliers and terms. Deferred payment, priority on shipments, price — all of this is frequently a personal arrangement that appears nowhere in the contract.
Key employees. They came to work for the owner, and they will follow him out if he starts something new.
Knowledge of the processes. The part that is written down nowhere: how cost price is calculated, why the company works with one contractor and not another, where the bottlenecks are.
Administrative access. Relationships with the regulators, with the landlord, with the bank. This is the least stable part of all: it does not transfer at all.
How to check this before the deal
Look at whose name the communication runs in. If correspondence with clients goes from the owner's personal email and calls come from his mobile, the relationships belong to him.
Check the client history. How many years they have been with the company, how often they order, whether there was a break. A client with a ten-year history and regular orders is more likely to stay than one who arrived this year.
Talk to the clients. Through the owner, with his consent, before completion. A refusal to arrange those conversations is an answer in itself.
Look at the owner's role in the processes. How many decisions a day pass through him, whether there are heads of function with real authority, what happens if he goes away for a month. That last question can be tested literally: ask him to go away.
Assess the team. Who holds the key competences, what arrangements they have, what keeps them there.
What secures the handover
The former owner staying on after the deal. Three to six months as a consultant or director, with a clear list of tasks: introduce the clients, hand over the processes, bring the new manager in. Paid for separately.
Deferred consideration linked to retention. Part of the price is paid a year later and depends on how many clients and employees remain. This is the fairest mechanism there is: it aligns the two sides' interests.
A non-compete undertaking. Under Russian law a straightforward ban on competition by an individual works unreliably, but a structure using a contractual penalty for breach of specific obligations — not to poach employees and clients for a defined period — is used in practice, and the courts assess it on the facts. The tool is imperfect, but it sets the standard of behaviour.
Moving communication onto corporate channels before the deal. Email, telephony, CRM, contracts. This is an organisational step rather than a legal one, and it is what makes the handover real.
Agreements with key employees. Terms of employment with the new owner discussed in advance, sometimes with a retention bonus.
What almost never transfers
Personal reputation and connections. If the business is built on the owner being known in the industry, the buyer gets the infrastructure but not the reputation.
Informal concessions: rent from an acquaintance below the market rate, a supplier discount granted "as a friend", deferred payment with no security.
None of this is a reason to walk away from the purchase — it is a reason to rerun the model on market terms and see whether it is still profitable.
A simple test before you decide
Write out ten things that make this business profitable. Next to each one, write down who it belongs to: the company, the owner or an employee.
If more than half belong to the owner, what you are buying is not a business but the chance to build one — and the price should reflect that.
I set out how pricing works in my first reply, before any work begins.
I provide legal services through Kovalev & Partners LLC — kovalev.moscow. Advice on the value of a business does not constitute valuation activity within the meaning of Federal Law No. 135-FZ.
