Glossary · Reading the business
Key employee
In short
An employee whose expertise, relationships, or performance is critical to the business's ongoing success. A buyer needs to identify these individuals to understand potential operational risks post-acquisition.
What it means in a deal
In your due diligence, identify who the key employees are beyond the owner. Assess their roles, compensation, and likelihood of staying after the sale. Losing a key employee can significantly impact revenue and operations, so plan for retention or replacement.
Related terms
Common questions about Key employee
- If a key non-owner employee is a foreign national, does this affect loan eligibility?
- What if the seller of a business remains a key employee after closing for a critical transition period?
- Beyond common officers/directors, how does a lender assess affiliation through "shared key employee functions" for SBA size standards?
- When can a lender require a collateral assignment of life insurance for a 7(a) loan on a non-owner key employee?
- If a key management employee who is not an owner is a foreign national, does this affect SBA 7(a) loan eligibility?
- If key employees resign during due diligence, could this kill the SBA loan approval?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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