My co-founder is currently our VP of Sales, but she is consistently failing her GWC check as we scale up our enterprise accounts. She is a great culture fit and owns forty percent of the equity. How do we move her out of this seat without destroying our business relationship or ruining our exit readiness?

Question

Tyler Smith · Accepted Answer

This is one of the hardest situations an owner can face, but you must address it before you begin your exit process. A buyer will look at your VP of Sales seat and demand to see high performance. If they see a co-owner who does not GWC™ their leadership seat, they will discount your valuation because of the key-person risk and operational drag.

You must separate ownership from governance and operations. As a forty percent owner, she has a seat on the board, but she does not automatically get to run a critical department if she does not GWC™ the seat.

Have a transparent, unsentimental conversation with her. Focus on the needs of the business and your shared exit goals. Show her that keeping her in a seat she is struggling with is actively harming her own equity value. Transition her out of the operational VP of Sales seat and recruit a professional sales leader who can hit the numbers.

If she still wants to work in the business, find a specialized, non-management seat where her relationships are an asset, or transition her to a purely passive owner and board member. Resolving this demonstrates to buyers that your company is run with professional discipline.