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Built to Sell: Creating a Business That Can Thrive Without You

John Warrillow · 2011 · Portfolio

Preparing to sellStrategy & readinessOwners years away from a sale
Why it is on the shelf. The most accessible statement of the single factor that most often discounts a private company’s value: a business that cannot run without its owner.

The Institute's reading

Warrillow writes it as a parable, an agency owner discovering that what he built is unsellable because he is the product, and uses the story to carry a hard doctrine: specialize until the offering is teachable, build recurring revenue, remove the owner from delivery, and prove the machine runs itself. It is a fast read with one idea, and the idea is the right one.

The Institute’s reading: this is deliberately the first book the Institute hands an owner who says they might sell someday. Its prescriptions are the same ones a quality of earnings review and a buyer’s diligence will eventually test, which means following them is not sale preparation so much as value creation that also happens to make the company transferable. Buyers should read it in reverse, as a checklist of what to probe in a founder-run target.

Key propositions

  • A business dependent on its owner is a job with employees, and buyers price it that way.
  • Recurring, productized revenue is what converts effort into transferable value.
  • Sellability is a discipline practiced years before a sale, not a project started at one.

In practice

  • Owners can score themselves against Warrillow’s criteria in an afternoon; the Readiness Diagnostic on this site asks the buyer-side versions of the same questions.
  • Buyers evaluating founder-run targets should treat his criteria as a risk checklist.
Acquisition Conciergeorientation · not legal, tax or valuation advice
Happy to dig into it. What would you like to pressure-test from Built to Sell: Creating a Business That Can Thrive Without You: one of its propositions, how it applies to your situation, or where it disagrees with the rest of the shelf?