We are planning an exit in three years, but a potential buyer will look closely at key-person risk on our leadership team. How do we restructure our Accountability Chart specifically to show institutional strength?

Question

Tyler Smith · Accepted Answer

A buyer wants to acquire a business that runs itself, not one that depends on the heroics of a few key individuals. To eliminate key-person risk, you must transition your Accountability Chart from person-centric to function-centric. Start by reviewing every seat on your leadership team. If any seat has multiple names, or if one person is occupying multiple major seats, you have a vulnerability. Define every seat on the chart based on the core functions the business needs to scale, not based on the unique talents of the current people in those seats. Each seat must have five clear, measurable roles. Next, run every leader through the GWC™ filter for their specific seat. If you have a seat where the current leader does not have the capacity to scale to the next level, you must begin building a succession plan or finding a replacement. Documenting your core processes and ensuring they are followed by all is the final step to institutionalizing your operations. This proves to a buyer that the leadership team can execute the business plan independently of you, significantly increasing your valuation.