The Responsible Person Problem: Owner Dependency in a Certificated Business

The PositionEvery certificated firm has one person the scheme is really about

Under the Regulatory Reform (Fire Safety) Order 2005 the duty at a premises falls on the responsible person, and that is your client rather than you. Inside a fire safety business there is a parallel role that has no statutory name: the individual who decides system category and design, signs off commissioning, answers the difficult question on site and stands behind the certificate. In an owner-managed firm that individual is almost always the owner.

Third party certification makes the position explicit. BAFE SP203-1 registration is held by the organisation, but it rests on nominated individuals with defined competence for each module, and the certification body knows exactly who they are. If those names and the owner's name are the same names, the business and the person are the same asset.

That is not a criticism of how the firm is run. It is usually the reason the firm is good. It is simply the single most common finding in a fire safety diligence exercise, and it is worth knowing about two years before a buyer finds it rather than two weeks after heads of terms.

If the nominated individuals on the certification and the owner are the same names, the business and the person are the same asset.

The DiscountWhat an acquirer does to the price when the competence is one person

An acquirer facing owner-held technical authority does three things, usually in combination. It moves money from completion into deferred consideration, so that the value is only paid if the business performs once the owner has gone. It asks for a longer handover period, twelve to twenty-four months rather than three. And it reduces the multiple, because the earnings it is buying carry a risk it cannot fully underwrite.

There is a compliance dimension on top of the commercial one, which is what makes this sector different from a trade where the owner is merely the best engineer. If the nominated individuals behind the scheme registration leave, the registration itself is in question until the organisation can show equivalent competence. A buyer will have read the scheme rules before it reads your accounts.

It shows up in the documents as well as the price. Where an acquirer cannot separate the business from the person, it asks for longer restrictive covenants and tighter warranties, because those are the instruments it has left to manage the risk with. Owners tend to concentrate on the headline figure and meet the rest of it at the drafting stage, by which point the position is harder to argue.

The same applies to relationships as to technical sign-off. If the five largest clients came to the business because of you personally and still ring your mobile, an acquirer reads that as revenue attached to a person. Contracted agreements help, but they do not fully answer it, because renewal decisions are made by people.

The FixMoving competence off one person is slow, ordinary work

The remedy is unglamorous and takes eighteen months to two years, which is precisely why it has to start before a sale is on the table. Identify a second individual capable of holding the technical authority, put them through the qualifications and CPD the scheme expects, and then name them. The nomination is the part owners defer, and it is the part that shows up in diligence.

Then move the evidence out of your head. Design decisions written down with the reasoning attached, a survey and quotation process that another person can follow, standard commissioning documentation, an escalation route that does not end at your mobile. If a buyer asks how a category decision gets made and the answer is a document rather than a name, the risk they were pricing has partly gone.

Introduce the second individual to the largest clients while you are still there, which is the step most owners find hardest and which does the most good. A client who has dealt with someone other than the owner for a year before completion is a client the acquirer can model. One who has not is a question mark in the deferred consideration.

None of this should be confused with stepping back. Most owners who go through it end up spending their time on the parts of the business they actually enjoy, because routine technical sign-off was rarely the enjoyable part. The version of a firm a buyer pays most for tends to be the version its owner would rather be running anyway.