**Episode 10 of the Business Growth and Exit Strategies Podcast**
If the business needs one person to hold it together, buyers will not pay for the growth. They will discount the fragility.
When a company comes in to acquire—whether private investor, investment group, or private equity—they look at an organization and say: this may be a really good deal for us because there are five or ten things we need to fix. We will hold it for the long run, fix those things, and just give the company a discount. We will make it back in a couple of months.
It is your money. You should do everything you can to hold on to it.
## Why Leadership Depth Matters
Leadership depth increases enterprise value by:
– Reducing key person risk
– Improving execution consistency
– Making cash flow more transferable
If you cannot leave your company for two weeks, a month, or three months, ask yourself why not. What is holding you back?
These are hard questions. They may hurt some feelings. It may be that you do not have the right people on your team. It may be a trust issue. For some people, it is a control issue.
## What Buyers Actually Purchase
Buyers are not buying you. They are buying a team and an operating system that can perform after you leave.
They want to know you can turn the keys over and walk away. It is just like buying a car. The last thing you want is the seller coming by to help fix the tail lights. It does not work that way.
A capable layer of leadership below you that can run sales, operations, and finance without founder intervention is the dream. That is a 10 out of 10.
## The Due Diligence Quiz
After financials, due diligence becomes: tell me about your company. This is typically a 200-300 question assessment.
I have seen it done as written documents. I have seen it done as interviews. Usually it happens after hours, on weekends, through a different email address than your company email.
The question they keep asking: who owns the outcomes? Who owns the responsibility?
If the answer is always the founder, or the roles are vague, the assumption is they are going to drop price.
## The Penalties for Weak Leadership Depth
Without leadership depth, you face:
– Lower multiple
– Heavier holdbacks and escrow
– Longer transition periods
– Earn-outs tied to performance
All because buyers are not confident in continuity.
Sometimes firms will say: you are not ready yet. If you really want the multiple, you have about 18 months of work to put in. Fix it and come back.
## The Three Seats Investors Want Filled
1. **Revenue:** Sales and marketing
2. **Delivery:** Operations and services
3. **Financial Control:** Finance and admin
If one of those three seats is missing, there will be questions. In smaller organizations, someone may occupy two seats. That happens. But you need standard operating procedures, org charts, and job descriptions.
## Leadership vs. Being the Best Doer
Owners often confuse leadership with being the best doer. They have to do everything.
Remember: at the end of the day, they are hoping they do not need you once the company is sold.
There are identity issues. You bootstrapped it. You made the time, money, and risk investment. Some of it means you just do not want to let go of control.
The best thing to do is say: I want to get the maximum multiple at my exit. Some of the things I have to do may not be the things I want to do, but I am going to get there.
## What You Need in Place
– Clear org chart with decision rights (decision bands)
– KPI ownership—who owns what swim lane
– Meeting cadence—daily, weekly, monthly
– Documented handoffs
– Performance history not dependent on the founder
## The Red Team Exercise
There is a book called Leadership Lessons of the Navy SEALs. One exercise: leadership is no longer around, who is in charge?
Do a red team exercise. Walk in one day and say: I am no longer here. Something happened. I got stuck on a trip with no cell phone, no internet. You cannot reach me.
Walk out of the room and say: solve the problem.
This will illuminate issues. Take it seriously and figure out how to get everybody on board.
## Decision Rights Remove Founder Bottlenecks
Decision rights include:
– Pricing guard rails
– Exception rules
– Hiring thresholds
– Speed limits
Leaders can act without escalation. If escalation is needed, they know the next person in the chain of command.
Start with role clarity, coaching, and accountability. Then add targeted hires or fractional people to fill gaps.
—
📊 **Free Framework Assessments:**
– [SELL Framework (Revenue Quality)](https://scottsylvanbell.com/sell-framework)
– [SCALE Framework (Operational Readiness)](https://scottsylvanbell.com/scale-framework)
– [DRIVER Test (Execution Capability)](https://scottsylvanbell.com/driver-test)
Apple Podcasts: https://podcasts.apple.com/us/podcast/episode-10-the-role-of-leadership-depth-in-exit/id1876771297?i=1000749397425
Spotify: https://open.spotify.com/episode/1MAanCfujAx2Op3hmnE2X5?si=_ZUJqNv5TTaABLiKNbbEqw
YouTube: https://youtu.be/S4_cdkkF63o
**Podcast Transcript: **
Today we’re on episode number 10: The Role of Leadership Depth in Exit Strategy—also known as “Get Off the Org Chart.”
If your business needs one person to hold it together, buyers won’t pay for the growth. They’ll discount the fragility.
When an investor, private equity group, or acquisition firm looks at your company, they’re thinking long term. They may see five or ten things that need to be fixed. Their mindset is simple: “We’ll buy it at a discount, fix the issues, and make the money back.” That discount comes out of your pocket. Leadership depth increases enterprise value by reducing key person risk, improving execution consistency, and making cash flow transferable.
If you can’t leave your company for two weeks, a month, or three months, ask yourself why. Is it trust? Control? Gaps in talent? These are hard questions, but they matter. Buyers aren’t purchasing you. They’re buying a team and an operating system that performs after you leave. They want to know that you can hand over the keys and walk away.
The dream scenario for an acquirer is a capable layer of leadership below the founder that can run sales, operations, and finance without founder intervention. That’s the 10 out of 10. That’s what earns maximum multiples.
After reviewing financials, buyers move into due diligence. That often includes extensive questionnaires and interviews—sometimes hundreds of questions—about how the business operates. Who owns outcomes? Who is accountable? If the answer is always “the founder,” that’s a ding. If roles are vague, that’s a ding. And enough dings lower your multiple, increase holdbacks, extend transition periods, and create earn-outs tied to performance.
If you have two, three, four, or five years before selling, use that time wisely. Install management layers. Clarify roles. Build independence. That signals to the market that your company is transferable.
Sometimes investors will say, “You’re not ready yet. Come back in 18 months after you fix these issues.” I’ve seen it happen many times. It’s not rejection—it’s guidance. The choice then becomes personal: fix it for maximum value, or accept a discounted exit.
If you ask me what three seats investors care about most, they are revenue (sales and marketing), delivery (operations and services), and financial control (finance and administration). If one of those seats is weak or missing, there will be questions.
This is where standard operating procedures, org charts, job descriptions, KPI ownership, and meeting cadence matter. Leadership is not about being the best doer. It’s about building a system that performs without you.
Start with a clear org chart that defines decision rights. Decision rights include financial thresholds—what can a supervisor approve, what can a manager approve, what escalates upward. Add KPI ownership. Establish meeting cadence—daily, weekly, monthly. Document handoffs. Track performance independent of the founder.
You can even run a “red team” exercise. Announce that you’re unavailable—no calls, no emails—and see how the business performs. Afterward, conduct a structured debrief. What broke? What assumptions were made? Who owned the gaps? These exercises reveal fragility quickly.
Decision rights remove the founder from unnecessary approvals. Define pricing guardrails, hiring thresholds, and exception policies so leaders can act without constant escalation. Build clarity through role definition, coaching, accountability, and targeted hiring where needed.
One area where resistance often appears is around job descriptions and SOPs. Sometimes managers argue that documentation creates legal risk. If that concern arises, consult a qualified labor attorney in your jurisdiction. Get clear answers. Document them. Don’t let hearsay stall progress. Uncertainty and internal resistance can quietly sabotage leadership depth.
Over the next 90 days, focus on ownership of the three seats: revenue, operations, and financial control. Define KPIs. Install weekly cadence. Document the top five workflows in sales, operations, and accounting. Then test the system—step away for a week during a manageable period and observe what happens.
Afterward, hold a structured report-out meeting. What worked? What failed? Where were assumptions wrong? What needs reinforcement? These conversations build depth.
This week, narrow down your three seats—revenue, operations, and financial control—and answer one question: If I’m gone for 30 days, who owns the results?
You’ll likely uncover areas of weakness. That’s normal. Every company has them. The key is addressing them before a buyer does.