Business continuity
Business continuity is how well a business can keep operating through a disruption — a key employee leaving, a supplier failure, a system outage, or the sale itself. In an M&A context it usually means one specific question: does the business survive the current owner walking away, or does performance drop the moment that person stops showing up?
Most small businesses were built by one person making most of the decisions, and that is fine right up until the point someone is trying to sell it. A buyer is not really buying yesterday’s revenue — they are buying the expectation that the business keeps performing after the person who built it is gone. Continuity is the evidence that expectation is reasonable.
What buyers look for as evidence
- A second person who can run day-to-day operations without the owner present
- Documented processes rather than knowledge that only exists in one head
- Customer and supplier relationships that are not tied exclusively to the owner personally
- A realistic transition plan, not just a promise that it will be fine
Why it is worth building before listing
A business with weak continuity does not necessarily sell for less on principle — it sells for less because buyers and lenders discount the risk that revenue drops after the transition. Building continuity in the year or two before a sale, rather than promising it during negotiations, is one of the more reliable ways to protect the price.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryKey-Person Dependency
- 02Treadstone LawLegal commentaryHow to Prepare a Business for Sale in Ontario
- 03Canadian Federation of Independent BusinessResearch dataSuccession Tsunami: Preparing for a decade of small business transitions
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