Many businesses under €5M revenue have a founder problem. Not the romantic Silicon Valley kind where visionary leaders refuse to delegate. The operational kind where the business literally cannot function without one person making every decision.
As we evaluate acquisition targets, this is the first pattern we look for. Not because founder dependency is necessarily bad, but because it determines everything about post-acquisition value creation. Buy a business where the founder is the business, and you've bought yourself a full-time job, not an asset.
Here's how to spot founder bottlenecks before you sign anything, and what to systematize first when you find them.
The real cost of founder dependency
Founder bottlenecks show up in three places: customer relationships, operational decisions, and institutional knowledge. Assume documentation claims are optimistic. Your job is to validate what's actually systematized versus what lives in the founder's head.
Research on organizational routines shows that businesses don't scale through heroic individuals. They scale through repeatable systems that work regardless of who's executing them. When founders hold too much implicit knowledge, you're not buying a business system. You're acquiring operator workload, not a transferable asset.
The economics matter here. If you're paying 3-5x EBITDA for a business generating €500K in profit, that's €1.5M-€2.5M. But that EBITDA assumes the founder's continued involvement. If post-handoff EBITDA falls 30-40% because customers leave or operations deteriorate, your effective multiple jumps from 4x to 5.7-6.7x. The deal only works if you can rebuild profitability fast.
Spotting dependency during due diligence
The founder dependency test is simple. Ask yourself: if this person disappeared tomorrow, what breaks first?
Five emails to request during diligence:
- One-month export of all inbound customer emails (to analyze first-touch and resolution patterns)
- Sample of three customer escalations with full thread (to see who resolves and how)
- Last quarter's vendor approval emails for purchases over €1,000 (to check decision bottlenecks)
- Three examples of "urgent" internal requests and founder responses (to assess operational dependency)
- Any out-of-office periods with handoff instructions (to validate backup systems)
In customer meetings, listen for pronouns. When the founder says "I handle all key accounts" or "they call me directly when issues come up," you've found dependency. When they say "our account team manages relationships" or "we have a rotation system for customer contact," you've found systems.
Watch email patterns if you get access to communications. Founders who are bottlenecks have themselves cc'd on everything. They're the ones responding to customer questions at 11pm. They're giving approvals for purchases under €500. Every decision flows through them because that's how they built the business.
Two objective tests help quantify this. First, pull a one-month export of inbound customer emails and tag who replies first and who resolves the issue. If the founder touches more than 40% of customer communications, that's operational dependency. Second, map the founder's calendar. What percentage of external meetings happen with the founder as the only company attendee? Above 60% means customers expect direct founder access.
The seller conversation reveals a lot too. Ask them to walk through a typical week. If they can't take a two-week vacation without daily check-ins, you're looking at operational dependency. If they've actually taken extended time off and the business continued normally, that's a system that works.
What to systematize first
You can't replace a founder with another person. You replace them with a system that captures their decision-making process, then train someone to run that system.
