One in six closely held businesses that score near the top on durability still relies heavily on its owner, according to the second issue of the Transferable Value Index published by The McFarland Group. The quarterly measure, based on 121 assessments submitted from May through September 2026, evaluates businesses on two dimensions: Business Durability and Owner Independence. The findings highlight a persistent gap between building a resilient company and building one that can thrive without its founder.
The Index reports that 19 of the 121 businesses, or roughly one in six, fall into a category called Owner-Dependent Success. These companies score close to the top bracket on durability, averaging 20.5 out of 30 against 22.0 for the top bracket, but trail by eight points on independence, at 14.6 versus 22.8. Across the full cohort, the two dimensions correlate at 0.57, sharing about a third of their variation. This means a business can become much sturdier financially while its owner remains just as central to its operations.
The sharpest divide emerges over people decisions. Six in ten owners say their team closes most new business and holds customer relationships, but fewer than half say their managers handle hiring, pay and terminations for their own teams. Twenty-two percent of owners report being personally involved in most people decisions, down to front-line roles—the most hands-on answer to any question in the Index. That single question tracks closely with overall performance: where managers make their own teams' people decisions, businesses average 74 out of 100 on the other eleven questions, and none falls into the Owner-Run category. Where the owner stays personally involved, the average drops to 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 significant implications for owners considering a sale. In due diligence, buyers ask who handles terminations because the answer reveals where responsibility truly sits. When the answer is still the owner, it signals that the leadership team has never made the hardest call in the building. The issue recommends that most owners start by handing people decisions to the managers who will own them after the transition. As in the inaugural issue, the question of who decides what the business does next scored lowest of the twelve on average, at 2.78 on a five-point scale.
For HR vendors, these results underscore a growing market for solutions that facilitate delegation of people decisions—such as manager self-service tools, decentralized HR platforms, and leadership development programs that push decision rights down to frontline managers. The full issue, including McFarland's letter and a complete question-by-question breakdown, is available at https://www.themcfarlandgroup.com/blog/a-good-business-that-still-runs-through-you. The Transferable Value Index assessment is free at transferablevalueindex.com and takes about four minutes, returning a score on both dimensions and a placement in one of four categories. The methodology notes that owners who take the Index are already thinking about an ownership transition, so the shares should be read in that light.
