Snapshot: Momentum That Looked Like Strength
The business was growing quickly. Revenue was climbing year over year, headcount was increasing, and new opportunities kept coming in faster than the team could comfortably absorb. From the outside, the company appeared healthy and successful, the kind of organization well positioned for a future sale whenever the owners decided the time was right.
Ownership was concentrated, with the founder still deeply involved in nearly every major decision. While capable managers were in place, the owner remained the central point of control, approval, and problem-solving. At the time, this was seen as a strength rather than a risk. The business moved fast, decisions were decisive, and clients associated the company’s success directly with the owner’s leadership.
Exit planning was acknowledged but vague. The intent was to sell at some point, once growth stabilized or the next phase of expansion was complete. There was no formal timeline and no sense that preparation needed to begin immediately.
Early Signs That Went Unexamined
As the company grew, small issues began to surface. Financial reporting lagged behind operational reality. Processes varied by team and were often undocumented. Key client relationships depended heavily on the owner’s direct involvement. While none of these issues felt urgent on their own, together they created a quiet dependency that went largely unexamined.
The owner believed the fundamentals were solid. Revenue growth was strong. Clients were satisfied. The leadership team was loyal. What felt “good enough” was never stress-tested against what a buyer would expect to see. The assumption was that growth itself would compensate for any internal messiness.
That assumption would later prove costly.
The Inflection Point
The moment of reckoning did not come from distress. It came from opportunity. An unsolicited inquiry from a potential buyer triggered serious consideration of a sale sooner than originally planned. The initial conversations were encouraging, and the headline valuation range aligned with the owner’s expectations.
As diligence began, however, the tone shifted.
Buyer questions exposed gaps that growth had masked. Financials were accurate but not decision-ready. Key processes lived in people’s heads rather than systems. Customer concentration risk was higher than expected once the owner’s personal relationships were taken into account. The leadership team was capable but not fully autonomous.
What had felt like momentum now looked like fragility under scrutiny.
Decisions Deferred Become Decisions Forced
Faced with buyer concerns, the owner had choices. Slow the process and invest time in strengthening the business, or proceed and accept the consequences. With momentum already in motion and advisors engaged, the decision was made to push forward.
Some changes were attempted mid-process, but they were necessarily reactive. Governance structures were introduced too late to carry weight. Efforts to formalize processes competed with ongoing growth demands. Attempts to reduce owner dependency raised questions rather than confidence.
The owner remained central because there was no practical alternative in the time available.
The Outcome
The transaction closed, but not on the terms originally envisioned. The valuation came in below expectations, with a significant portion of the purchase price tied to earnouts and future performance. Additional representations, warranties, and post-close obligations were required to offset perceived risk.
The timeline was longer than expected, the process more invasive, and the emotional toll higher than anticipated. What looked like a successful exit on paper felt more constrained in practice.
Reflection: Growth Is Not Readiness
In hindsight, the owner recognized that growth had created a false sense of security. Revenue masked risk. Busyness obscured fragility. The business had been built to perform, not to transfer.
What mattered more than expected was clarity. Clear financial narratives. Clear decision rights. Clear independence from the owner. What mattered less was top-line growth alone. Buyers were willing to pay for durability, not just momentum.
The single decision that had the greatest impact on the outcome was waiting too long to separate growth from readiness. By the time the exit became a reality, there was little room to reshape the business on favorable terms.
Core Lesson
Growth can make a business look strong, but only readiness determines how well it transfers.