Our business has grown by acquiring smaller local agencies, and our Accountability Chart is now a messy mix of geographic divisions and functional departments. How do we determine whether we should structure our chart by function or by division to show buyers we can scale?

Question

Tyler Smith · Accepted Answer

To maximize your exit valuation, your Accountability Chart must reflect a clean, repeatable operating model. Buyers hate messy, hybrid structures because they are difficult to integrate and manage. You must choose a single structural logic and stick to it.

For most scaling service businesses, a functional structure is the most scalable. In a functional structure, you have centralized seats for Sales, Marketing, Operations, and Finance. Under the Operations seat, you can then have regional or divisional managers. This keeps your leadership team lean and focused on company-wide strategy, rather than having multiple mini-CEOs running their own geographic fiefdoms.

If your acquisitions operate in completely different industries with different customer bases and delivery methods, a divisional structure might be necessary. In that case, each division has its own distinct seat under a central Integrator.

Look at your long-term exit goals. If a buyer is going to integrate your business into their existing platform, they will want a functional structure so they can easily absorb your operations into their centralized departments. Sit down with your leadership team and use the IDS process to decide which structure simplifies communication, eliminates duplicate administrative costs, and creates the cleanest reporting lines for a prospective acquirer.