When the Founder Is the Business: A Buyer's View
The Concentration Problem Founder-led companies often grow precisely because one person holds every important relationship in their head. A manufacturing founder personally negotiates with the three suppliers that make up seventy percent of cost of goods sold. A services founder is the only person the top five clients trust to sign off on scope changes. This is efficient in year one and dangerous by year ten, because the business has never had to prove it can function without that individual in the room. Buyers do not see this as charisma; they see it as unpriced risk. When customer or supplier relationships are concentrated in one person, diligence teams apply a discount that has nothing to do with revenue quality and everything to do with continuity. A company earning the same margin as a competitor can be valued lower simply because its relationships are not portable. Decision Rights That Exist Only on Paper Most founders will insist they delegate. The org chart usually agrees w...