A Good Business That Still Runs Through You: Issue 02 of the Transferable Value Index

The second issue of the Transferable Value Index is out today. It measures 121 closely held businesses on two things: how durably each one is built, and how well it runs without its owner. It opens with a letter from Byron McFarland, our founder, on why those two turn out to be separate projects.

The headline finding is about a group of good businesses. One in six of the companies we measured is built to last and still runs through its owner. What sets them apart from the top bracket is mostly one question: who makes the people decisions.

If you would rather see where your own business lands before reading anyone else's numbers, the assessment takes about four minutes.

Durable and independent are two different scores

The Index asks twelve questions about how a business would hold up without its owner. Six measure Business Durability: steady earnings, a spread of customers, timely books, work that lives in systems, backup people, and a model that can take a hit. Six measure Owner Independence: who sells, who keeps the customers, who runs operations, and who makes the calls on what comes next, on money, and on people.

Most owners assume the two move together. Build the business well enough and it stops needing you. Across these 121 businesses the two are only moderately related, sharing about a third of their variation. That leaves plenty of room for a company that scores well on one and poorly on the other.

Those 19 businesses in the lower right are what the Index calls Owner-Dependent Success. On durability they sit close to the top bracket, 20.5 against 22.0 out of 30. On independence they trail it by eight points, 14.6 against 22.8. They are good companies with steady earnings and real customers. The owner is still at the center of them.

What owners have handed off, and where it stops

Most owners in this cohort have already handed off a lot. Six in ten say their team closes most new business and holds the customer relationships. Those are the handoffs owners are told are hardest, and most of these owners have made them.

People decisions are another matter. Fewer than half say their managers handle hiring, pay and terminations for their own teams. Twenty-two percent say they are personally involved in most people decisions, down to front-line roles, and no other question draws that many owners to its most hands-on answer.

One finding carries over from the inaugural issue. Innovation, the question of who decides what the business does next, still scores lowest on average, at 2.78. People decisions averages 3.11, and that average hides a split: more owners pick the most hands-on answer on people than on any other question.

Who made your last hire?

Sort the 121 owners by their answer to the people question, then score each business on the other eleven questions, and the pattern is plain.

• Managers decide for their own teams (57 owners): 74 out of 100
• Owner keeps the final call on senior roles (24 owners): 67 out of 100
• Owner personally involved (40 owners): 56 out of 100

Where managers make their own teams' people decisions, not one business lands in the Owner-Run quadrant. Where the owner stays personally involved, nearly half do. And among the 19 Owner-Dependent Success businesses, 68 percent still have the owner involved in people decisions. Among Transferable Enterprises, 10 percent do. Of the six independence questions, this is the one that separates the two groups most.

This matters in a sale. In due diligence, a buyer asks who handles terminations, because the answer shows where responsibility sits in the company. If it is still the owner, the leadership team has never made the hardest call in the building, and every other strength in the business gets weighed against that. A buyer deciding whether a company is bankable is asking, in part, whether the team can run the business on its own judgment.

Two businesses with the same durability

The issue closes on two real businesses from the Index, names removed. Both score 25 of 30 on durability. One scores 17 on independence and the other 26.

Business A's owner has handed off sales and money decisions completely. Operations, direction and most people decisions still run through the owner personally. Business B has spread those same decisions across its team. A buyer, a lender, or a management team considering a buyout would see two very different companies, even though they score the same on durability.

A letter from our founder

Byron's letter takes on the idea that independence follows from quality: make the business good enough and it will run itself. He describes an owner who spent ten years making a business more durable, with recurring contracts, monthly closes and a diversified customer list, without stepping back from any of it. This is the passage at the heart of the letter:

"The business got sturdier. The owner didn't get any less essential to it."

And this is the one we would underline:

"Nobody does the second by accident. You have to mean it."

The letter is a single page, and it is the best case we can make for why these numbers look the way they do. Read it in the PDF.

Where to start

The data carries good news for most owners. Durability is largely built. The work that remains sits on the independence side, and the widest gap there is people decisions. So start there, and hand those decisions to the managers who will own them after the ownership transition.

In practice that tends to be gradual. Pick one team and give its manager the front-line hiring decisions outright. Agree on pay ranges ahead of time so that compensation calls stop routing upward. When a hard performance conversation comes, let the manager make the call and stay in the role of counsel. Each step builds the leadership bench a successor will need, and each one is a decision the team will have already made by the time a buyer asks.

If you are weighing a sale to your own management team, this is the same work from the other side. A management team that has never hired or let anyone go is inheriting a company it has not yet run.

About the Index

Twelve questions, each scored 1 to 5, across two dimensions: Business Durability and Owner Independence. Each dimension is reported out of 30 and scores High at 18; the combined Index is out of 100. Issue 02 covers 121 assessments submitted from May 2 through September 29, 2026, reached through our network, partner coaches and industry events. Test submissions are removed and repeat takers counted once. Owners who take the Index are already thinking about an ownership transition, and the findings should be read that way. The Index publishes quarterly.

See where your business lands

The assessment takes about four minutes. You get your score on both dimensions and your quadrant placement when you finish, along with a short personal report on where your business holds up and where it still leans on you. No gate and no sales call.

Take the assessment at transferablevalueindex.com

For the full picture, the quadrant map, every score, the people question and the letter, download Issue 02 (PDF). It is the version to forward to a partner, an advisor, or the managers who might run the place someday.