Founder / Owner Transitions & Key Man Risk

Sharing some thoughts and observations after working alongside sponsors who have diligenced and acquired platforms and small businesses where the founder was a key man risk. The smaller the company, the more elevated these issues can be. The most common problem I see is that the founder is the system of record. The SOPs are in their head. What's on paper isn't followed to the T, and a lot of day-to-day decisions are held for founder signoff: pricing calls, vendor issues, customer escalations. Stuff they don't even think of as "their job" because it's been muscle memory for 20 years. The other piece is relationships. The top customers aren’t necessarily calling the founder every day (hopefully), but when issues arise, the founder is the fixer. Same with key vendors and subs. That's not a CRM issue, it’s more of a two-way trust issue where the founder steps in because it’s easier than delegating. Think “if you want something done right, do it yourself”. Then there's the team. Employees in these businesses are loyal to the founder, not exactly the org chart. When a new operator walks in, everyone is wondering how this impacts them. Is their job safe? What’s going to change? And will they like the new culture? A major goal for the new operator is to win the confidence and trust of the team, because losing a key person or two in first few months can turn a learning quarter into a rebuilding year. So what does year one actually need to look like for the new operator? A few things stand out to me: Institutionalize the founder's tribal knowledge. Not just what they do, but how they think when they make decisions. That thought process is what the new operator needs to replicate. Push decision-making down to the staff where it belongs. A lot of these businesses have capable people who've just never been empowered to act without a green light from the top. Run a deliberate relationship handoff with key customers and vendors, the ones where founder is very present. Not an email intro, real face time with the founder by your side. (If possible) If you're working through a deal where the founder transition is the piece you're trying to figure out, happy to compare notes. Feel free to DM me.