The buy-side Quality of Earnings firm is arguing that our adjusted EBITDA is overstated because my replacement salary as founder is set too low compared to market rates for a non-owner CEO. How do we use our Accountability Chart to prove that my actual operational duties are already distributed across our leadership team?

Question

Tyler Smith · Accepted Answer

Buy-side Quality of Earnings auditors love to find adjustments that reduce your historical EBITDA. A favorite tactic is arguing that your historical salary as founder was below market rate, which means they must subtract a hypothetical executive salary from your earnings to show the true cost of running the business. If they successfully apply this normalization adjustment, it directly lowers your valuation.

You can shut down this argument by showing that your business does not rely on a single heroic founder. Present your EOS Accountability Chart to the auditors. Walk them through how the major operational functions, such as sales, marketing, operations, and finance, are already led by capable directors who are paid market-rate salaries.

Show them that your seat on the chart is highly focused on strategic vision, rather than daily execution. If your leadership team is already running the business through structured Level 10 Meetings and hitting their quarterly Rocks, you have concrete proof that the buyer does not need to hire an expensive replacement CEO to maintain current cash flows.

By proving your operational maturity through your organizational structure, you can force the auditors to drop or significantly reduce their salary adjustment. This preserves your adjusted EBITDA and protects your valuation multiple.