The McFarland Group has released the second issue of its Transferable Value Index, a quarterly measure of how closely held businesses hold up without their owners. Based on 121 assessments submitted between May and September 2026, the report highlights a critical challenge for business owners planning an ownership transition: many durable companies remain deeply dependent on their founders, especially when it comes to people decisions.
The Index scores businesses on two dimensions: Business Durability and Owner Independence. While the two correlate at 0.57, sharing about a third of their variation, a business can become sturdier without reducing owner centrality. One in six businesses, or 19 of the 121, fall into the Owner-Dependent Success category. These companies score near the top on durability (20.5 out of 30) but lag by eight points on independence (14.6 vs. 22.8).
The sharpest divide is over people decisions. Six in ten owners say their team closes most new business and holds customer relationships. However, fewer than half say their managers handle hiring, pay, and terminations for their own teams, and 22 percent of owners remain personally involved in most people decisions, down to front-line roles. This hands-on approach tracks closely with lower overall scores: where managers make their own teams’ people decisions, businesses average 74 out of 100 on the other eleven questions, and none falls in the Owner-Run category. Where the owner stays personally involved, the average is 56, and nearly half are Owner-Run. Among Owner-Dependent Success businesses, 68 percent of owners remain personally involved in people decisions, compared with 10 percent in the top bracket.
“Building a durable business rewards involvement: your judgment, your relationships, your standards, stamped on everything,” said Byron McFarland, Founder of The McFarland Group. “Building an independent one requires the opposite: removing your judgment, your relationships, your standards from the machinery, one piece at a time, on purpose. Nobody does the second by accident. You have to mean it.”
The finding carries into a sale. In due diligence, a buyer asks who handles terminations, because the answer shows where responsibility sits. When the answer is still the owner, the leadership team has never made the hardest call in the building. The issue’s recommendation for most owners is to start with people decisions and hand them to the managers who will own them after the ownership transition.
The full issue, including McFarland’s letter, a map of all 121 businesses, and the complete question-by-question breakdown, is free to download without a form at https://www.themcfarlandgroup.com/blog/a-good-business-that-still-runs-through-you. The Transferable Value Index assessment is free at transferablevalueindex.com. It takes about four minutes and returns a score on both dimensions and a placement in one of four categories.
The implications are significant for owners considering a transition. As the Index shows, businesses that fail to delegate people decisions may struggle to demonstrate transferable value to potential buyers. By focusing on this area first, owners can build the independence that buyers seek and increase the likelihood of a successful ownership change.
