Our finance director is a loyal friend who helped me start this business, but they lack the capability to build the sophisticated financial models and compliance structures required for our upcoming exit. How do we balance our personal loyalty to this individual with the professional capabilities the business desperately needs?

Question

Tyler Smith · Accepted Answer

This is one of the most painful decisions an owner will face, but you must separate personal loyalty from business capability. Your responsibility to the company, your employees, and your equity value must outweigh your personal relationships. If your current finance director does not have the capability to prepare your financials for an exit, keeping them in that seat is a disservice to both them and the business. They are likely stressed, working outside their comfort zone, and holding back your valuation.

You need to run this situation through the GWC framework. While they certainly share your core values and get the job, they do not have the capacity to execute the high-level financial strategy needed for a transaction. To resolve this without destroying the relationship, have an honest, compassionate conversation.

Explain that the requirements of the seat have changed to prepare for a clean exit. Map out the new responsibilities on the Accountability Chart. Offer them a different, specialized seat in the finance department that matches their actual capabilities, and bring in a fractional or full-time CFO to lead the department.

If they cannot accept this transition, you must help them transition out of the business with a generous severance that honors their loyalty. True loyalty means doing what is right for the long-term health of the company, even when it is incredibly difficult.