Why Succession Planning is Essential for Business Growth and Enterprise Value
We had some great conversations with our clients last week and wanted to share a theme that came up repeatedly: the importance of succession planning.
Many business owners assume succession planning only matters when they are ready to retire, but in reality it becomes critical much earlier. Succession is not just about “who takes over when you leave.” It is about positioning your company to grow beyond the capacity of one individual, reducing risk, and making your business more valuable.
This is exactly where Athena Advisory Collective steps in. We sit in the middle of both sides: working with buyers to identify businesses with strong succession potential, and partnering with owners to grow, professionalize, and prepare their companies for succession or exit.
The Baseball Analogy: Understanding Revenue Stages
Running a business is like working your way up through the ranks of professional baseball. At each level, the game changes, and the same approach that worked before can actually hold you back.
Single-A (under $5M)
At this stage, the owner is on the field every day, wearing multiple hats. The company relies heavily on the founder’s hustle and personal decision making. Growth is driven by energy and vision more than systems.Double-A ($5M–$10M)
A C-suite may exist on paper, but in reality the owner still acts as the de facto CEO. This is where bottlenecks begin. NetSuite notes that companies approaching $10M in revenue often outgrow their systems and processes, requiring more formal structure and better financial reporting. At this level, the owner’s ceiling becomes the company’s ceiling.Triple-A (around $50M)
By the time a company hits $50M, investors, acquirers, and lenders expect professional leadership, strong financial controls, and clear succession plans. Brentwood Growth reports that businesses crossing $50M are often seen as prime acquisition targets, but only if they demonstrate scalable infrastructure, departmental specialization, and a leadership bench beyond the founder.Majors ($100M+)
Very few companies reach this stage. To compete at this level, the founder has long since stepped out of daily operations. Leadership is fully professionalized, governance is formal, and systems are designed for scale. The owner may remain as chair or visionary, but the business is valued for the strength of its team and structure, not for the founder’s ability to personally run it.
The baseball analogy mirrors our work with clients. We partner with owners to move their businesses up through the leagues by building teams, strengthening systems, and expanding capacity. That is what makes succession planning more than a contingency. It becomes the through-line of growth and value creation.
-
As companies move up through the leagues, systems and leadership must shift from founder-driven to professionally managed. The businesses that thrive are the ones that invest in succession planning early, making themselves less dependent on the owner.
The Owner’s Ceiling
The qualities that get a business through its first $5M such as grit, control, and hands-on involvement often become the barrier to scaling further. Even with executives in place, if every decision still flows through the owner, growth slows down.
Succession planning removes this ceiling. It creates space for leaders to step into their roles, builds confidence with investors and employees, and makes the business more resilient. Buyers look specifically for companies where leadership and systems are not dependent on one person. This is exactly where Athena provides value, helping owners professionalize leadership and operations while aligning with what buyers reward in higher valuations.
How Succession Planning Builds Enterprise Value
Enterprise value is directly tied to risk. The more a business depends on one person, the higher the risk and the lower the valuation. A strong succession plan addresses this head-on.
Poorly managed CEO transitions cost companies nearly $1 trillion annually in lost value, while well-managed successions add measurable returns (Harvard Business School).
40% of businesses have no succession plan, which leaves them exposed to crises and valuation discounts (Millman Search Group).
Companies with formal succession planning experience higher revenue growth, stronger retention, and higher sale multiples (Gitnux Succession Planning Report).
Only 30% of family-owned businesses make it to the second generation, largely due to lack of planning (Family Business Institute).
Because Athena works with both buyers and owners, we see this dynamic from both sides. We know exactly what increases enterprise value such as strong teams, scalable systems, and reliable reporting. We partner with owners to build those capabilities so they are not only succession-ready, but positioned to command higher multiples in the market.
-
Strong leadership teams, not just a strong founder
Scalable systems and reliable reporting
Clear authority outside of the owner
Documented succession and growth plans
Stories That Show the Shift
Breaking the Plateau at $8M
A services company grew to $8 million but stalled. The owner was still approving every contract and financial decision. After putting a leadership team in place and shifting decision making, the business doubled in size within three years. Enterprise value rose sharply because the company no longer relied on one individual. This is the type of transformation that happens when owners allow us to act as private, non-equity partners, implementing the systems and leadership structures that buyers want to see.
Stabilizing at $60M
A firm at $60 million was losing margin as the founder micromanaged operations and finance. By installing a COO and CFO, the company gained operational discipline, strengthened reporting, and became more attractive to outside investors. The estimated valuation increased by nearly 30 percent once the business became less founder-dependent. This reflects exactly what we hear from buyers: strong leadership benches and financial controls translate directly to higher value.
A Tale of Two Family Businesses
One family-owned company lacked a succession plan when the founder suddenly became ill. Key employees left, clients hesitated, and the eventual sale happened at a steep discount. Another family business invested early in grooming next-generation leaders and documenting its systems. When the founder transitioned out, continuity was seamless and the company later sold at a premium. For owners, this is the difference between leaving money on the table and building a legacy. Our work ensures they end up in the second camp.
What Changes at Each Stage
Here is what typically shifts in leadership and systems as companies move through the leagues:
| Stage | Key Shifts | Succession Needs |
|---|---|---|
| Single-A (<$5M) | Informal systems, founder-driven growth, reliance on owner relationships | Identify rising leaders early, start documenting processes |
| Double-A ($5M–$10M) | Systems and reporting begin to crack, owner still central to most decisions | Define executive roles clearly, create authority outside the owner |
| Triple-A (~$50M) | Departmental specialization (finance, HR, ops, sales ops), external investor expectations | Strong CFO/COO succession, board oversight, clear leadership development |
| Majors ($100M+) | Fully professionalized leadership, governance formalized, global competition | Ongoing executive succession, formal CEO transitions, long-term enterprise strategy |
At each of these stages, Athena’s role evolves with the company. We adapt to where the business is, creating value by filling leadership gaps, strengthening systems, and building capacity at the right time. Sometimes that means stepping directly into co-CEO responsibilities, financial leadership, or operational implementation. Other times, it means connecting the business with trusted partner organizations, often drawn from our own client network, to provide specialized expertise in areas like HR, IT, or legal. In every case, we ensure the right people and systems are in place so the business can scale beyond the owner. Succession planning becomes the framework that ties it all together, making the company stronger, less owner-dependent, and more attractive to buyers.
Practical Steps for Owners
Assess your level: Are you running a Single-A, Double-A, Triple-A, or Major League operation?
Identify critical roles: Plan succession not only for CEO but also for finance, operations, and sales.
Develop your bench: Mentor high-potential leaders internally and recruit externally to fill gaps.
Document systems: Capture financials, processes, and key knowledge in accessible formats.
Redefine your role: Transition from daily operator to visionary, chair, or ambassador.
Tie planning to valuation: Buyers reward leadership continuity and reduced owner dependency with higher multiples.
Review annually: Succession is a living strategy, not a one-time event.
Positioning for the Next Stage
Succession planning is not just a retirement tool. It is a growth strategy. It ensures that your business can advance to the next league, build long-term value, and thrive beyond the capacity of a single person.
At Athena Advisory Collective, we act as private, non-equity partners to business owners who want to scale, strengthen, and prepare their companies for succession or exit. Because we also work with buyers, we know exactly what drives enterprise value and what reduces it. Our role is to help owners build strong leadership benches, implement systems, expand capacity, and position their companies to succeed in the eyes of employees, investors, and the market.
The strongest leaders know when it is time to move from being on the field to managing the roster.
