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Velocity Scaling
Velocity Scaling | 25-Factor Exit Readiness Audit

25-Factor Exit Readiness Audit

Evaluate your business across 25 key transferability vectors. Rate each factor on a scale from 1 (Critical Drag / High Risk) to 5 (Optimized / System-Dependent).

1. Founder Decoupling & Governance
1. Founder Dependency (Daily Ops)
Can the business run for 30+ days without the founder making daily operational decisions?
1 = Total Collapse5 = Runs Completely Independent
2. Founder Dependency (Client Trust)
Do key client relationships belong to the enterprise/brand rather than the founder personally?
1 = Clients Only Trust Founder5 = Owned 100% by Team/Brand
3. Second-Layer Leadership
Is there an empowered, capable management team owning key departments (Operations, Sales, Finance)?
1 = No Management Layer5 = Fully Autonomous Executive Team
4. Decision-Rights Clarity
Are decision-making thresholds and authority hard-coded across management levels?
1 = Founder Decides Everything5 = Clear Matrix & Thresholds
5. Governing Operating Rhythms
Is a structured management framework (e.g., EOS, Scaling Up) actively driving accountability?
1 = Ad-hoc Firefighting5 = Strict Execution Rhythms
2. Financial Architecture & EBITDA Quality
6. EBITDA Normalization
Are books fully normalized, clean, and free of owner-discretionary or personal expenses?
1 = Messy / Personal Run-Through5 = Audit-Ready Normalization
7. Gross Margin Stability
Are gross margins healthy, predictable, and protected against cost increases?
1 = Volatile / Compressing5 = Industry-Leading / Stable
8. Revenue Recurrence & Predictability
What percentage of total revenue is contracted, recurring, or highly repeatable?
1 = 0–10% Recurrent5 = 80%+ Contracted / Recurring
9. Financial Visibility & Benchmarking
Are monthly financial statements, KPIs, and unit economics closed within 10 days of month-end?
1 = Delayed / Unclear Data5 = Fast Real-time Dashboards
10. Capital Intensity & Working Capital
Is the business cash-flow positive without requiring heavy ongoing capital reinvestment?
1 = Heavy CapEx Trap5 = High Free Cash Flow Yield
3. Sales Engine & Market Scalability
11. Decentralized Sales Pipeline
Does customer acquisition function independently of the founder’s personal network or sales calls?
1 = Founder Closes All Deals5 = Autonomous Sales Team
12. Customer Concentration Risk
Does any single customer account for more than 10%–15% of total annual revenue?
1 = Top Client > 30%5 = No Client > 10%
13. Pricing Power & Moat
Does the business possess unique IP, proprietary methodology, or high switching costs?
1 = Commodity / Price Taker5 = High Pricing Power Moat
14. Total Addressable Market (TAM) Runway
Is there clear room for a buyer to scale the company significantly in its current market?
1 = Tapped-out Niche5 = Massive Scale Runway
15. Brand & Marketing Disconnection
Is the brand identity independent of the founder's personal name and reputation?
1 = Personal Brand Only5 = Standalone Commercial Brand
4. Operational Systems & Scalability
16. Codified Systems & Playbooks (SOPs)
Are core business processes, delivery steps, and workflows documented in accessible playbooks?
1 = All in Heads5 = Fully Codified Playbooks
17. Key-Person Risk (Non-Founder)
Is the company protected against the sudden loss of any single critical employee?
1 = Vulnerable to 1 Person5 = Cross-Trained / Redundant
18. Operating Leverage
Can top-line revenue grow significantly without requiring a proportional increase in headcount?
1 = Linear Headcount Drag5 = High Scalable Leverage
19. Supplier & Vendor Concentration
Are critical supply chains and vendor relationships diversified and contractually secured?
1 = Single Point of Failure5 = Diversified & Secured
20. Technology & Scalable Stack
Are IT systems, software platforms, and infrastructure modern, secure, and scalable?
1 = Outdated Tech Debt5 = Modern Tech Infrastructure
5. Legal, Risk & Transferability
21. Transferable Contracts
Do customer and vendor contracts contain assignability/change-of-control clauses?
1 = No Contracts / Non-assignable5 = 100% Assignable M&A Ready
22. Clean Corporate Records & Compliance
Are corporate governance, IP assignments, licenses, and legal filings audited and up to date?
1 = Messy / Missing Records5 = Fully Audited & Clean
23. Key-Employee Retention Mechanisms
Are incentive plans ("golden handcuffs," phantom stock, stay bonuses) in place for key leaders?
1 = Flight Risk High5 = Long-term Incentives In Place
24. Data Room Readiness
Is there an organized, centralized repository of corporate, legal, and financial documents?
1 = No Data Room5 = Institutional-Grade Data Room
25. Clear Exit Strategy & Magic Number
Does the founder know their exact net financial goal ("Exit Magic Number") and preferred exit path?
1 = No Plan / Guessing5 = Defined Exit Target & Number