We want to exit our business in twenty-four months, but our cap table includes minority shareholders who are also employees, and their performance is slipshod. How do we use EOS® to clean up this operational and legal mess before we go to market?

Question

Tyler Smith · Accepted Answer

A messy cap table combined with poor operational performance is a massive red flag for any potential buyer and will instantly devalue your business during due diligence. You must decouple ownership from operations immediately. In an EOS®-run company, equity ownership does not buy you a free pass on performance. Every single employee, regardless of their shareholder status, must sit in a clearly defined seat on the Accountability Chart and fully meet the GWC™ criteria for that role.

- Run a formal GWC™ assessment on these employee-owners. If they do not Get, Want, or have the Capacity to fulfill their operational responsibilities, they must be removed from their seat, just like any other non-performing employee. Do not let fear of shareholder friction prevent you from making the right organizational decision.

- Work with your legal counsel to review your shareholder agreement and determine the buyout terms for terminated employee-owners. Buyers want to see a clean operational structure where the management team is highly competent and completely separated from legacy equity arrangements.

By using the Accountability Chart to enforce operational standards objectively, you protect the value of the business and present a highly structured, low-risk acquisition target to potential suitors.