Let me suggest that, unless your key employee is working on a time-sensitive (30-60 day) project AND has some critical expertise that no one else in the organization can even approximate, let whatever happens, happen, because delaying someone's departure is rarely as beneficial as one hopes.
Too, the unintended consequences of delaying an employee from leaving, like that, are significant:
>> You're basically training other employees to look outside so that they can get an incentive to stay, too. (Or by not counter-offering, you're basically forcing their hands to leave before they really wanted to.)
>> Your efforts to retain people who have already decided they don't want want to stay helps neither you nor them in anything beyond the shortest of terms.
>> You're diluting any incentive for other employees to want to show their loyalty.
>> You're demotivating that employee's direct reports from striving to learn and perform at a higher level because you just eliminated any opportunity for them to be promoted anytime soon.
So if a person wants to leave, I say embrace the paradox that every employee is important and no employee is irreplaceable, and let him/her get on with his/her career and see it as an opportunity for you to reinvigorate your organization by filling the position internally, if possible.
An additional note: It's important to also realize that just because a key employee is interviewing, externally, it doesn't mean that s/he WILL leave. Maybe the person is just assessing his/her worth on the open market for year-end salary discussions. Maybe s/he is doing someone a favor by taking the interview. Maybe s/he's doing some research and analysis with the competition so to help you and your company to even greater heights. Maybe s/he's doing it because it's a great way to reconfirm why s/he wants to STAY with you. The possibilities are endless.