The Importance of Succession Planning in Small Business Acquisitions

When I buy a small business, I always ask myself: What happens if key people leave? Over time, I’ve realized that succession planning is one of the most overlooked but critical parts of acquisitions. Without it, the business is fragile. With it, the business is durable and transferable.

Succession planning isn’t just about retirement or ownership. It’s about ensuring that if an employee, manager, or even the owner disappears tomorrow, the business still runs.

Why Succession Planning Matters

Succession planning matters because it:

• Protects against key person risk
• Ensures continuity during transitions
• Builds confidence with employees and customers
• Increases transferable value for buyers like me
• Strengthens culture by showing growth paths

Without it, businesses rely too heavily on individuals instead of systems.

My Early Mistakes

In one acquisition, I assumed managers had trained backups. When one left, I discovered no one else knew how to handle their responsibilities. Operations stalled, and morale suffered.

In another deal, I underestimated how much the owner personally handled. Without a succession plan, I had to scramble to fill gaps.

These experiences taught me to prioritize succession planning both before and after closing.

How I Evaluate Succession Planning

During diligence, I ask:

• Who are the key employees, and who can replace them if needed?
• Are processes documented so others can step in?
• Has the owner delegated, or are they still the bottleneck?
• Are there career paths for employees to grow into bigger roles?

If the answers are weak, I know succession planning is missing.

How I Build Succession Planning After Closing

Once I own the business, I will strengthen succession planning by:

• Identifying key employees and developing backups
• Documenting all core processes
• Cross-training staff to reduce single points of failure
• Creating promotion pathways for talent
• Investing in leadership development programs

Succession planning becomes part of the culture, not just a project.

Why Succession Planning Affects Valuation

Businesses with strong succession systems are worth more because they’re resilient. Buyers like me pay higher multiples for companies where leadership transitions won’t disrupt operations.

Final Thoughts

I’ve learned that succession planning is one of the most important drivers of transferable value. Without it, businesses crumble when key people leave. With it, businesses thrive no matter who’s in charge.

That’s why I study succession planning during diligence and prioritize it post-close. It protects employees, customers, and ultimately the long-term value of the company.

I continue sharing my acquisition frameworks and lessons at DrConnorRobertson.com, where I document how I build resilience into every deal.