Bill Canady explains why CEOs become indispensable bottlenecks in Phase 3 growth, then warns that buyers in Phase 4 will ask who else can run the business. Enterprise value depends on EBITDA times a multiple, and that multiple is determined by how risky the business looks to a buyer.
Now, the failure mode for phase 3 is the hero CEO, the one who's got it all figured out. They know what they're doing. If you feel like the chief everything officer, it's not because you're a micromanager. Most of the CEOs who feel that way are the opposite of micromanagers. They're carrying the loads because the architecture was never designed to carry it without them. That's a design problem, not a character flaw, and it's fixable, but it's fixable in phase 3. Not in phase 4 when the buyer's advisor is asking who else can run this. So now we're on phase 4. That's day 731 to day 1,000. I call that always be exiting, ABE, always be exiting. It's the last phase and the job is the premium. And here's the thing about the premium I need you to internalize because it changes what you do on a Tuesday. Enterprise value is EBITDA times a multiple. Every operator alive understands the first term. Almost nobody works on the second one on purpose. The multiple here is not handed to you by the market. It is substantially a function of how risky your business looks to someone who has to write a check and then live with what they bought.
