Keyman Risk – Real situation from one of our ongoing engagements.

We were hired to do a business valuation for a family business.

Operations are running. Financials are provided. Everything looks “normal” on the surface.

Until we reached the Q&A stage.

Q: “Please break down ‘Other income’ in the P&L.”

A: “Interest income and selling of scraps.”

Q: “What determines the profit margin differences between products over the past 3 years?”

A: “Refer to Mr. B “

The problem?

At that moment, Mr. B had been unavailable for over a month — and our valuation process slowed immediately.

The company is operating.

But critical knowledge lives in just one person’s head.

We fully understand the situation is sensitive and unexpected.

But from a valuation (and risk) perspective, this revealed two big things:

1️⃣ Information concentration can completely stall a deal

2️⃣ It’s also one of the biggest hidden operational risks in family businesses

This case is now delayed — not because of numbers, but because of key-man dependency.

This is what we call key-man risk.

It doesn’t show up on the balance sheet,

but it directly affects deal timelines, buyer confidence, and company valuation.

Systems matter just as much as numbers — especially for family businesses and owner-managed companies.

#ORNA #Consult #BusinessValuation #Keyman #Risk