We are preparing for an exit using the Step by Step Exit framework and want to prove to buyers that our leadership team runs the company. How do we use our weekly department-level scorecards to prove that our mid-level managers are fully accountable without the owner intervening?

Question

Tyler Smith · Accepted Answer

If you want to maximize your valuation and prepare for a clean exit, you must prove to a buyer that the business runs without your day-to-day involvement. Buyers look for high process maturity, which is proven when mid-level managers own their numbers. To demonstrate this, you must cascade your Scorecard down to your departmental teams. Your leadership team Scorecard should only contain high-level metrics owned by your directors. Each director must then run a departmental Level 10 Meeting with a scorecard of 5 to 15 metrics owned by their direct reports. During due diligence, you can show a buyer thirteen-week trends of these departmental scorecards. This proves that your mid-level managers are identifying, discussing, and solving issues on their own, without the owner stepping in. Using the Step by Step Exit framework, this level of decentralized accountability dramatically reduces owner dependence. It shows a buyer that they are purchasing an operational system run by an empowered team, which is exactly what commands a premium multiple.