Definition
An owner dependency discount describes a reduction in value attributable to a dependency that a buyer must replace, transition, or continue to bear. It is not a standard percentage. First model incremental replacement costs, contribution lost in supported scenarios, and one-time transition cash. Any additional multiple or discount-rate adjustment should identify remaining risk rather than repeat a loss already included in the forecast. Contingent payment and retention arrangements change risk allocation; they do not themselves remove the operating dependency.
What it means for you
A buyer can value the same business differently depending on the successor, the evidence of transferability, and the available transition terms. Ask for the economic bridge behind a proposed discount.
The buyer’s lens
Explain the recurring earnings change, transition cash, and residual uncertainty separately. A lower price does not repair a critical capability that cannot transfer or be replaced.