We have set a hard five-year target for our exit. How do we adjust our V/TO to make sure our annual Rocks and long-term goals are focused on enterprise value rather than just maximizing our personal distributions?

Question

Tyler Smith · Accepted Answer

When you are five years away from a sale, your V/TO must undergo a fundamental shift. You are no longer building a business to fund your personal lifestyle. You are building an enterprise designed for a high-multiple acquisition. To do this, start by redefining your 10-Year Target on the V/TO to match your five-year exit goal. This alignment forces your leadership team to focus on the enterprise value of the business rather than near-term cash distributions. During your annual planning sessions, your focus must shift toward scaling your systems and eliminating operational friction. Your three-year picture must outline a company that is highly automated, deeply structured, and completely independent of the founders. Your annual plans and quarterly Rocks must be directly tied to removing key risks that buyers discount for, such as customer concentration, undocumented intellectual property, and single-source supplier dependencies. By structuring your V/TO with the ultimate buyer in mind, you align your weekly execution with the metrics that drive valuation. Every quarterly priority must answer a simple question: does this project make our revenue more predictable and our operations more transferable? If the answer is no, it does not deserve to be a Rock.