We are preparing for an exit and want to know how to eliminate the discount buyers place on key-man risk. Our senior sales director brings in forty percent of our new business, and buyers see this as a major risk. How do we restructure our sales operations to protect our valuation?

Question

Tyler Smith · Accepted Answer

Key-person dependency is just as dangerous to your multiple as founder dependency. If your senior sales director holds the keys to forty percent of your revenue, a buyer will view that individual as a single point of failure and discount your valuation accordingly. To protect your multiple, you must turn their personal sales talent into a documented company asset. Start by mapping out your sales process as part of your core processes. Ensure that every step, from lead generation to contract signing, is standardized and tracked in your CRM. Use your weekly Level 10 Meeting to review sales activity metrics, ensuring that the entire pipeline is visible and managed systematically. Next, restructure the Accountability Chart so that the sales director is responsible for managing a process and teaching others, rather than operating as a lone wolf. If the sales director GWC's their seat, they should be building a team that shares the load. By showing the buyer an institutionalized sales process that does not depend on one person's relationships, you eliminate the risk of a post-close collapse and secure a premium valuation.