The buyer’s team spent two days with the management of a scaling company, around a hundred and twenty people. They liked the growth and wanted the product.
On the second afternoon they asked a plain question. When a pricing exception comes in, who approves it?
The head of sales looked at the CEO. The CEO said, “Usually me, but it is quick.”
Nobody in the room thought anything of it. The buyer’s analyst wrote down one line.
What the line becomes
Due diligence is largely a search for what happens to value when the people who built it step back. Contracts, code and customer lists can be checked on paper. How many decisions run through one person cannot, so it gets asked in conversation, and asked again across hiring, pricing, roadmap and major customers.
Each “usually me” is a small note. Together they become a position on key-person risk.
That is the buyer’s math. It is not done on the accounts. It asks how much of the value leaves if one person does.
Where the discount shows up
It rarely appears as a line called “CEO dependency.” It can appear as an earn-out tied to the CEO staying for a few years. As a longer handover. As a lower multiple with another reason written next to it.
The CEO experiences it as the price of the deal. The buyer experiences it as the price of the risk.
The same fact, read from the other side
For years, being the one who decides felt like proof of being needed, and being needed felt like value. In the diligence room the same fact reads the other way. A company that runs on one person’s judgment is worth what that judgment is worth, for as long as that person stays.
The company that is easiest to sell is the one that does not need the seller.
Myrto Zehnder partners with CEOs and founders of scaling organisations on the structural architecture underneath recurring organisational problems.
The Eagle’s Perspective — myrtozehnder.com
This is one of the ten costs in
