Second Line Management

Second Line Management: Who Needs to Be in Place Before You Sell

When I look at a potential acquisition, one of the first questions I ask is not about EBITDA or revenue growth. It is a simpler, harder question:

“If you turned off your phone and went to the mountains for three months, would the business grow, stall, or die?”

For many owners I meet—especially those who have built their companies over 20+ years—the honest answer is that the business would stall. Or worse.

They have loyal staff. They have hardworking employees. But they do not have a Second Line of Management. They have "helpers" who execute tasks, while the owner makes every real decision.

For you, as the owner, being the indispensable hub might feel secure. It means you are needed. But for a buyer like me, and for the bank financing the deal, it is a massive red flag. It turns a transferable asset into a risky, owner-dependent job.

If you are planning to sell in the next 1–5 years, building a Second Line is the single most profitable investment you can make. It directly impacts your valuation, the deal structure, and the likelihood of closing.

Here is who actually needs to be in place, and why.

The "Skeleton" of a Second Line

You do not need to hire a fancy C-Suite with expensive corporate titles. For a typical SME with €2M–€10M in revenue, I am looking for three specific anchors.

These are not necessarily new hires. They are often existing employees who need to be elevated from "doers" to "owners of the process."

1. The Commercial Anchor (Who owns the customer?)

In many SMEs, the owner is the Head of Sales. You hold the relationships with the top 5 clients. You negotiate the annual contracts. You smooth things over when there is a mistake.

The Risk: If I buy the company and you leave, those clients have no emotional connection to the business. They have a connection to you.

The Solution: You need a Sales Manager or Commercial Lead who is the primary contact for key accounts. When a client has a problem, they should call this person, not you. When it is time to renew a contract, this person should lead the negotiation.

2. The Operational Anchor (Who keeps the promise?)

This is the person who ensures the product gets made or the service gets delivered.

The Risk: If the production line breaks or a crew doesn't show up, who fixes it? If the answer is "the owner drives down to the site," the business is not transferable.

The Solution: You need an Operations Manager or Head of Production who has the authority to solve problems without your permission. They need to know the "secret sauce"—the technical details that live in your head—and have the autonomy to run the daily engine.

3. The Financial Anchor (Who watches the money?)

I am not talking about an external tax accountant who files your returns once a year.

The Risk: A buyer needs to know that cash flow, invoicing, and expenses are being tracked in real-time. If the owner is the only one who knows which invoices are overdue or how much cash is in the bank, the financial controls are too weak for a bank to finance.

The Solution: An internal bookkeeper, controller, or a very active office manager who understands the cash cycle. They ensure the data in the system matches reality, so I can trust the reports without asking you to explain every line item.

Authority, Not Just Titles

The biggest mistake I see owners make is giving people titles without giving them power.

You might appoint a "General Manager," but if they have to knock on your door to approve a €500 purchase or a vacation request, they are not a manager. They are an assistant with a title.

For a Second Line to be credible to a buyer, they must have:

• Budget Authority: The ability to spend money within limits to fix problems.

• Hiring/Firing Power: The ability to manage their own teams.

• Decision Rights: The ability to make calls on pricing (within margins) or operations without checking with you first.

Why This Changes the Deal Structure

You might be thinking: "Alex, I'll hire these people right before I sell. Or you can hire them after you buy."

It doesn't work that way.

If I have to hire the management team after I buy, I am taking on a huge execution risk. I have to find them, train them, and hope they fit. Because of that risk, I cannot pay you 100% upfront.

I will likely structure the deal with a heavy Earn-Out. This means a large part of your purchase price will be contingent on the business surviving the transition. Effectively, you are financing my risk.   

However, if you present a business where the Second Line has been running the show for 12 months—where they know the clients, run the shop, and track the numbers—the risk profile drops.

• The bank is more willing to lend (higher DSCR comfort).

• I am more willing to pay a higher portion of Cash at Close.

• Your transition period can be shorter (6 months instead of 2 years).

The "Test Drive" Period

The best way to prove you have a Second Line is to let them drive while you are still in the car.

Ideally, you want to spend the 6–12 months before a sale stepping back. Let your Commercial Anchor handle the big renewals. Let your Ops Manager fix the crisis.

If they stumble, you are there to coach them. But if they succeed, you have built a track record. When I interview them during due diligence, they will speak with confidence: "I handle X, I decided Y." That confidence is what sells the business.

Conclusion

Building a Second Line is not about abdicating responsibility. It is about professionalizing your legacy.

It shifts your company from being "Peter’s Business" to being an independent institution that happens to be owned by Peter. That is the difference between a business that is hard to sell and one that professional buyers compete for.

Start now. Look at your team. Who is ready to step up? And what authority are you ready to give away today to secure your exit tomorrow?

If This Sounds Like Your Situation

If you recognize your business in this description, you don’t have to decide anything today. The quiet next step is the short confidential seller form on my site — you can outline your business in a few fields, and if there’s a potential fit, we’ll use it as a structured first step for a calm, non-binding conversation.

👉👉 Seller form link here>>