The Succession Problem

Had a conversation a while back with a founder who was planning to sell in three years. We were going through the business and I asked what would happen to the main client relationships if he wasn't there.

He thought about it and said: "Honestly, most of them would probably leave."

He wasn't upset about it. He said it like it was just how things are. He'd built a business around the fact that clients liked him, trusted him, had known him for years. That was the asset, as far as he was concerned.

The problem was it was also the liability. You can't sell a business where the main thing clients are buying is the founder. Or you can, but you'll sell it for much less, with an earnout that keeps you there for three years anyway, which rather defeats the object.

What he needed — and this is what I spent the next two years helping him build — was a layer of people between him and the clients. Not just account managers. People with real authority, proper relationships, skin in the game. By the time he came to sell, three of those people had been running major client relationships for eighteen months without him in the room.

So he got a much, much better deal. and he was free to make a happy decision about his next move.

scorecard.felixvelarde.com — there's a section on how dependent your agency is on you.