Risk
Exposures that cause a buyer to discount the multiple or walk away. Risk elements are scored as control: a higher score means the risk is contained.
The elements
The six elements of risk
What buyers subtract for. Scored as control, so a higher score is safer: owner dependence, documentation, concentration, key people, compliance.
19 · G2
Owner Dependence
How much of revenue, relationships, and decisions route through the owner. Scored as control: higher is safer.
What the assay measures
Share of revenue, key relationships, and decisions that require the owner, and days per year the business runs without owner contact.
20 · H2
Documentation Debt
Processes, contracts, and records that exist only in people’s heads. Scored as control: higher is safer.
What the assay measures
Share of critical processes, contracts, and records that exist in written, current form.
21 · G3
Customer Concentration
Revenue share held by the top customers. Scored as control: higher is safer.
What the assay measures
Revenue share of the largest customer and of the top five, and the contract terms protecting that revenue.
22 · H3
Key-Person Risk
Employees whose departure would break a function. Scored as control: higher is safer.
What the assay measures
Roles where a single departure would halt a function, and the depth of cross-training or succession behind each.
23 · G4
Legal & Compliance
Contracts, licenses, and filings in order and enforceable.
What the assay measures
Currency of licenses, permits, contracts, and filings; open or threatened litigation; unresolved compliance findings.
24 · H4
Tech Debt
Aging systems, custom code, and unsupported tools a buyer would have to replace. Scored as control: higher is safer.
What the assay measures
Age and support status of core systems, share of custom code without documentation or maintainers, known security or data gaps, and the estimated cost for a buyer to remediate.
How it is scored
Control: higher is safer
Risk elements are scored as control. A high score on Owner Dependence means the dependence is low. This keeps every tile in the table pointing the same direction: higher is always better.
Compounds
Where risk bonds with the rest of the table
Buyers underwrite some elements together, as one question. These are the compounds the risk elements take part in, and the elements they bond with.
Where it is worked
Where FNDRS works on risk
Each element is worked at a stage of the journey, and most sit in one of the six pillars of value. Here is where the risk elements land.
The stages
Establish a company capable of becoming valuable rather than merely producing founder income. Baseline valuation, health check, constraint inventory, and the first roadmap.
Discovery, valuation, and analysis in the FNDRS processSell · Maximize value and optionality
CcPrepare, position, market, negotiate, and transact so the outcome is the best risk-adjusted one for the owner. Or hold, from a position of strength.
Go to market and the M&A process
The pillars
Customer and revenue quality
CcBuyers underwrite this compound before anything else: revenue that repeats without being re-sold, customers who stay, and no single account that can sink the deal.
Read the pillarThe single biggest lever on the multiple, and the one that takes the longest to move. A buyer is paying for a company, not for you, and the price reflects how true that is.
Read the pillarPreparation is leverage. A company that can answer a buyer's first twenty questions on day one closes faster, at the agreed price, with nothing surfacing in diligence that was not already disclosed.
Read the pillar
The families
Seven families, one table
The table reads left to right in the order value is created: what you start with, the engine, the multiple, the discount, the transfer, what you keep, and what all of it is for.
The discount
What buyers subtract for. Scored as control, so a higher score is safer: owner dependence, documentation, concentration, key people, compliance.
See where your risk elements stand
The exit score is the first assay: fifteen minutes, six pillars, and a first read on the elements that matter most.