We are planning to exit the business in four years, but my leadership team is entirely focused on their department-level metrics instead of building enterprise value. How do we align their focus and compensation with a successful exit?

Question

Tyler Smith · Accepted Answer

If your leadership team is only focused on their individual department silos, your company will not command the premium valuation you want when it is time to sell. Buyers look for a cohesive leadership team that acts like owners and manages the business as a single, integrated system.

To align their focus, you must first educate them on what actually drives enterprise value. Bring the team back to the V/TO® and explicitly show them how their individual Rocks and department metrics directly impact the company's net profit, cash flow, and operational efficiency.

Next, update your Scorecard to include high-level, leading indicators of enterprise value that the entire team reviews together every week during your Level 10 Meeting™. This forces them to look at the business holistically and collaborate across departments to solve structural issues.

Finally, align their compensation with the exit goals. Implement a long-term incentive plan, such as phantom stock, synthetic equity, or a stay-bonus pool tied to the final valuation of the company. When your leadership team members know they have a direct financial stake in the enterprise value, their perspective will shift from managing daily activities to building a highly valuable, self-sustaining asset that is ready for a clean, profitable exit.