Exits are not happening.
Entrepreneurs need a crash course in self awareness! The epiphany that comes to some private company owners too late – my business is not saleable.
One of the biggest risks facing a buyer that kill deals – Owner dependency (I know there are some crazy AI examples that are effectively acquihires but that’s not the majority of solid family/middle market companies)
Why is owner dependency a turn off?
It potentially tells the buyer:
▶️There is no succession plan in this company
▶️The owner is unlikely to be as motivated under a new boss
▶️The culture is unlikely to be robust, repeatable and open
▶️Future sustainable profits are in doubt
▶️Depending on the owner’s skill set I can’t repeat the target’s technical success
▶️The business is likely to be a lifestyle business lacking in professional management and operational playbooks
▶️The brand is probably personality driven
▶️I will need to have an external CEO ready to move in at short notice
▶️Post-acquisition integration is likely to be painful
Instead accept the fact that every start-up is owner dependant! The question is how you will you scale your business to dilute that dependency. Over time solution should involve:
▶️Acquiring talent with a growth mindset that get stuff done
▶️Building as early as possible a company training plan and ideally create a mini university of courses. Teach finance people about sales, building deep product knowledge across customer facing departments
▶️Building a succession plan for all managers including the owner
▶️Developing Project Management skills across the board
▶️Expose folk to new challenges
▶️Encourage monthly meetings to review performance and that challenges the status quo
This will create value over time and makes the business so much more transferable and more saleable even if you hang onto it.
LOOK THROUGH THE LENS OF A BUYER. Understand the buyer’s risks and you will build a safer, stronger business.
