You Have A CFO. You Still Don't Know What It's Worth.

A founder told me this week that his company has a full-time CFO.

A few minutes later he told me they have no idea how to value a business.

Both of those things were true at the same time, and neither one is a criticism of his CFO.

They run a services business. Real company, real systems, a proper ERP, conservative with debt, grown organically for years without ever needing to be clever about it. Now they want to buy competitors. Two to six million in revenue, a couple of cities over.

And he said the quiet part without flinching. We do not know how to value one of these, and we do not know how to keep the customers once we own it.

I have a lot of respect for that. Most founders would have pretended.

But here is the thing that stayed with me after the call.

The finance seat is already filled. Full time. And the answer still was not in the building.

Because those are two different jobs, and almost nobody tells founders that until it matters.

The CFO seat, as most companies actually run it, is about the past and the present. Close the month. Get the reporting right. Manage the cash. Keep the controls tight. Stay out of trouble with the bank and with the IRS. That work is real, and most companies under ten million do it badly.

Valuation is a different muscle entirely. It is about the future, and about what somebody else would pay for it.

Most finance careers never touch a transaction. You can do twenty solid years in accounting and controllership and never once sit through a deal. That is not a failure. It is a different road.

So a company can have a genuinely good CFO and still have nobody who has ever answered the question "what is this worth, and to whom."

Let me show you what that gap costs, because it is not abstract.

Say you are looking at a company doing four million in revenue at a ten percent margin. Four hundred thousand of EBITDA. The seller wants four times. One point six million.

That sounds reasonable. Plenty of businesses trade in that neighborhood.

Now look at where the revenue actually lives.

Thirty percent of it sits in three contracts. Two of those three are relationships the owner personally built and personally maintains. He is the one they call. He is the reason they renew.

He is also the guy who is about to take your money and leave.

If those two contracts walk in year one, you are at two point eight million in revenue. But your managers, your insurance, your equipment, your back office, none of that shrinks by thirty percent to keep you company. Fixed cost does not care about your problems.

So EBITDA does not drop to two eighty. It drops closer to a hundred and twenty.

You did not pay four times.

You paid thirteen.

Same company. Same price. Completely different deal. And nothing in the seller's financials warned you, because a P&L is a record of what happened while he was still standing there.

Now here is the part I actually want you to sit with, and it is not really about acquisitions.

Every company has two numbers.

The first is what it earns. You know that one cold. You could tell me last month's revenue right now, from memory, to the dollar.

The second is what it is worth without you.

Almost no founder knows the second number. Most have never been asked for it. And the two are not related in the way you would assume, which is the entire problem.

You can grow the first number for years and shrink the second one at the same time.

Take on more customers who only want to deal with you. Say yes to the account that needs your personal attention. Keep the pricing decisions in your head because it is faster than explaining them.

Revenue up. Value down.

The founders who get blindsided at a closing table are the ones who spent a decade pushing the first number and assumed the second one was following along behind it.

It wasn't.

And this matters even if you never sell anything.

Every single thing a buyer would discount you for is a thing that is costing you money today.

Customer concentration is not just a deal risk. It is why you cannot afford to fire a bad account.

Owner-dependent relationships are not just a valuation problem. They are why you cannot take two weeks off.

Undocumented process is not just a diligence finding. It is why every new hire takes six months to become useful.

A buyer does not invent those problems. He is just the first person who ever put a price on them.

Build the company to be sellable and you get a better company to run whether you sell it or not. That is the whole argument. Exit optional. Discipline not.

So, three questions.

If your single largest customer left on Monday, what percentage of your revenue goes out the door with them?

How many of your top ten accounts have a real relationship with somebody who is not you?

And if you were gone for ninety days with no phone, what would be waiting for you when you got back?

You do not need to answer those for me. You need to answer them for yourself, on paper, with actual numbers written next to them.

You have been running the first number your whole career.

Nobody has been running the second one.

And tell me this one below, because I am genuinely curious. If you disappeared for ninety days, what percentage of your revenue would still be there when you got back? Rough guess is fine. "I would rather not find out" is also an answer, and an honest one.

Cruz