The short answer
A private-equity hold runs five to seven years, but the window in which a CEO can still change the outcome is roughly the first 1,000 days. After that you are no longer building value — you are presenting it, because the numbers you will be sold on are already made.
Those 1,000 days are not one job. They are four different jobs done in sequence, and the skills that win the first will lose you the third:
- Days 1–100 — Take control. Deliverable: command. By Day 100 anyone in the building can state the goal, the strategy, and who owns what.
- Days 101–365 — Earn the right to grow. Deliverable: margin, EBITDA and cash visibly turned by Day 365.
- Days 366–730 — Scale what matters. Deliverable: a flywheel. Growth that continues when the CEO is on a plane.
- Days 731–1,000 — Always be exiting. Deliverable: the premium. The multiple, worked on purpose.
Roughly 70% of PE-backed CEOs are replaced during the hold, and the replacements cluster hard between months 18 and 24 — the moment the second phase comes due and the bill arrives for a year of expansion that got mistaken for growth. Meanwhile a deal underwritten today needs 10–12% annual EBITDA growth to return what the sponsor promised, against roughly 5% a decade ago.
The governing rule: you cannot skip a phase, you can only defer it, and deferred phases get more expensive every quarter.
Why does a 1,000-day clock exist at all?
When a sponsor buys a company, they buy it with an exit already modeled and dated. Holds have stretched — they are the longest they have been in about twenty-five years, and more than half of PE-backed companies are now held past four years. But the stretch does not extend your working window. It extends the waiting.
The part of the hold where a CEO can materially change the outcome is the front of it. Call it a thousand days — two years and nine months. Past that point the diligence is running, the story is being packaged, and the operating decisions that will show up in the sale price have already been made and have already had time to compound. You do not get to fix a margin structure in the data room.
So the clock is not a motivational device. It is arithmetic about when your decisions still have time to work.
Why do the same competent CEOs fail the same way?
The CEO hired into a PE-backed seat is usually hired for one quality: they are a closer. Decisive, commercial, able to go get revenue. So on Day 1 they do the thing they are good at.
And it works. Quarters three and four look strong. Revenue climbs. The board is pleased.
Underneath it, the business is getting more complicated every week. More customers, more SKUs, more one-off pricing, more exceptions and configurations, more small orders from small accounts that somebody in operations is expediting on a Tuesday afternoon.
None of it shows up as a line item. There is no expense category called “too much stuff.” So it hides — in capacity, in cycle time, in the 14% discount somebody granted in 2019 that nobody ever revisited.
Then around month fifteen the growth curve flattens, because the business ran out of capacity rather than demand. The margin curve, drifting down the whole time, finally crosses in front of the revenue curve where everyone can see it.
That is the month-nineteen phone call. Revenue up eleven percent, two record months, EBITDA flat, and a board that has stopped asking how it is going and started asking what the plan is. Two calls later there is a co-pilot nobody asked for. Two quarters later somebody else has the office.
That CEO did not fail through laziness. He worked harder than anyone in the building. He spent nineteen months making the business bigger without making it better, and by the time the scoreboard told him, the clock had taken most of what he had left.
What is Phase One actually for?
Days 1–100. The job is command — not strategy, command. The deliverable is that by Day 100 every person in the building can state the goal, the strategy, and who owns what. Not approximately. Verbatim.
The common mistake is defensible and expensive. A thoughtful new CEO says, correctly, “I don’t know enough yet — I’ll spend ninety days listening.” So they run a listening tour. Every plant. A hundred and twenty one-on-ones. It is good leadership behavior and it is the wrong use of the only clean pass you will ever get.
Because whatever you intend, a listening tour communicates one thing: nothing has changed yet. And the organization is watching closely for whether something has changed, because until they see it, every person runs the old playbook while telling you in the one-on-one how excited they are about the new direction.
On Day 101 you are no longer the new CEO. You are just the CEO, and everything you did not change in the first hundred days is now something you are endorsing.
Phase One is four meetings: get a goal, set the strategy, reorganize the company, take action.
Failure mode: the laundry list. Twenty-five initiatives. A beautiful, comprehensive deck in which every function is represented so nobody’s feelings were hurt — and which is functionally identical to having no plan. If everything is a priority, the organization picks its own priorities, and it will pick the comfortable ones.
What does “earn the right to grow” actually mean?
Days 101–365. The job changes completely, and this is where the closer starts to struggle.
The job is not growth. It is becoming the kind of business that can grow profitably — and only then growing. The deliverable is margin, EBITDA and cash visibly turned by Day 365. Not a plan to turn them. Turned.
Most CEOs try to grow before they have earned it. Grow a business that has not earned it and you do not get growth — you get expansion. Bigger, more complicated and less profitable at the same time. You have scaled the dysfunction.
The distinction is mechanical, not moral. Growth is adding a dollar of revenue and keeping a larger share of it than last year. Expansion is adding a dollar and keeping a smaller share. They look identical on the top line and diverge on the bottom line about four quarters later — exactly long enough to have hired against the wrong one.
A business below a certain operating threshold will not convert incremental revenue into incremental profit. It will convert it into incremental cost. That is not a value judgment. That is a machine, and it is measurable: a two-line ratio off your own P&L, about thirty minutes, one verdict on whether you are on the grow track or the fix-first track.
Phase Two is where you segment the business and find where profit actually lives; where you find the bottom-value customers buying bottom-value products and discover that roughly 4% of revenue is consuming 20–40% of capacity; where you fix price, the fastest lever you will ever touch; and where you rebuild the budget from zero rather than from last year, because last year plus five percent locks in every bad decision already made.
Failure mode: flinching. You build the analysis, you see the tail clearly, and somebody says the sentence — “but that’s still four million dollars of revenue.” Flinch there and the whole phase is decoration. The four percent is not the cost. The four percent is the bait.
Why does Phase Three end more tenures than any other?
Days 366–730. Scale what matters. Now you have earned it. Now you grow. And the job changes again.
Phases One and Two can be pushed through on personal force. You can establish command by sheer presence. You can drive a simplification agenda by being the most stubborn person in the room. Phase Three cannot be done that way. Phase Three requires the business to run without you in the room — and if the only functioning system in the company is your personal attention, you have hit your ceiling. The ceiling is not the market. It is you.
The deliverable is a flywheel by Day 730: growth that continues while you are on a plane, a leadership team where each person owns a number and presents it themselves, and an operating cadence — weekly, monthly, quarterly — that runs whether or not you feel energetic.
Failure mode: the hero CEO. If you feel like the Chief Everything Officer, that is usually not micromanagement. Most CEOs who feel that way are the opposite of micromanagers — they are carrying the load because the architecture was never designed to carry it without them. That is a design problem, not a character flaw. It is fixable in Phase Three. It is not fixable in Phase Four, when the buyer’s advisor asks who else can run this.
How do you build the premium instead of hoping for it?
Days 731–1,000. Always be exiting.
Enterprise value is EBITDA times a multiple. Every operator works the first term. Almost nobody works the second one on purpose.
The multiple is not handed down by the market. It is substantially a function of how risky the business looks to somebody who has to write a check and then live with what they bought. Customer concentration. Owner dependency. Whether the forecast has ever been right. Whether the management team survives your departure. All of it is inside your control, and all of it is worth turns.
That is why the phases run in this order. Margin and cash move first because they are fastest. The multiple re-rates last, because it only re-rates once the business has genuinely de-risked — and de-risking takes the two years you spent building the team and the cadence. You cannot sprint it in the final ninety days. Everyone tries. Buyers can smell a business that was tidied up for the sale, and they price it accordingly.
Failure mode: treating the business like your baby. Inside this structure the company is a product, and a product exists to be sold in the best condition at the best moment. Operators who make peace with that early make materially more money than those who make peace with it in the data room.
How do I find out which phase I’m actually in?
Three moves. All three can be run in a weekend; the first takes about four minutes.
Move one — locate yourself on the clock. Get the date the deal closed, not the date you started. Count the days to today. Write the number down, then write which phase it puts you in.
Expect discomfort. People are consistently further along than they feel. Somebody who feels newly started turns out to be on Day 380 — which means Phase One is over, and whatever command was established is the command they have. You cannot manage a clock you refuse to read.
Move two — grade the phase you just finished. Honestly, alone, on paper.
- Phase One, command: Can three people picked at random state the company goal in one sentence, without looking it up? Not the mission statement. The goal. Go ask three people this week. What comes back is your grade.
- Phase Two, cash: Is EBITDA in dollars higher than twelve months ago — and can you name the two specific decisions that moved it? Revenue does not count. “The market was better” does not count.
- Phase Three, the flywheel: If you were unreachable for thirty days, what breaks? Write the actual list. It is usually shorter than people expect — rarely “everything,” usually four decisions only you make.
Whatever phase you fail is your real work. Not the phase you are in. The phase you skipped.
Move three — pick one thing and date it. One, not five. Take the earliest failed phase, take its deliverable, convert it into a single dated commitment inside thirty days. Then tell somebody — your CFO, your sponsor, your spouse. An undated intention is a wish, and a wish has never moved an income statement.
What does it look like when this is working?
It looks boring. That is the tell.
The scoreboard is the same five to ten numbers every week. The same people present their own numbers. Variances get causes and countermeasures, not adjectives. Nobody is surprised in a board meeting, because bad news travels fast in a company where it is safe to move.
Theater looks exciting. Big kickoff, great deck, a new name for the program, real energy for six weeks. Then the cadence slips — the weekly gets moved for a customer visit, then moved again, then it is every other week — and by the second quarter nobody can state the goal, because it changed twice and neither change was announced.
Boring compounds. Exciting is what people do instead of the work.
The through-line: luck is the residue of design
Every CEO who delivers a premium exit will, over a drink, tell you they got lucky. The market turned. A competitor stumbled. A strategic buyer arrived with a reason to overpay. All true — and none of it the explanation.
The explanation is that when the luck arrived, the business was in condition to catch it. Clean segments. Real margin. A team that runs without the CEO in the room. That is not luck. That is residue, and somebody designed it on purpose, on a schedule, starting around Day 1.
The CEOs who were replaced will tell you they got unlucky. Also true, also not the explanation. Luck came for both. Only one was built to hold it.
Frequently asked questions
What is the 1,000-day rule for PE-backed CEOs? A private-equity hold typically runs five to seven years, but the window in which the CEO can still change the outcome is roughly the first 1,000 days — about two years and nine months. After that the business is being presented rather than built, because the numbers it will be sold on have already been made. The 1,000 days divide into four phases, each with one deliverable and one deadline.
Why do private equity-backed CEOs get replaced between months 18 and 24? Because that is when the second phase comes due. A CEO hired as a closer spends the first year growing revenue, which quietly adds complexity — more SKUs, more exceptions, more small accounts. Around month fifteen the growth curve flattens on capacity rather than demand, and the margin curve that has been drifting down finally crosses in front of it. Revenue looks fine; EBITDA is flat. That is the moment boards act.
What are the four phases of a 1,000-day hold? Days 1–100, take control — the deliverable is command. Days 101–365, earn the right to grow — the deliverable is margin, EBITDA and cash visibly turned. Days 366–730, scale what matters — the deliverable is a flywheel that runs without the CEO. Days 731–1,000, always be exiting — the deliverable is the premium, meaning the multiple worked on purpose.
What is the difference between growth and expansion? Growth is adding a dollar of revenue and keeping a larger share of it than you did last year. Expansion is adding a dollar and keeping a smaller share. They are indistinguishable on the top line and diverge on the bottom line roughly four quarters later — long enough for a CEO to have hired, invested and committed against the wrong one.
Can you skip a phase in the 1,000-day framework? No. You can only defer it, and deferred phases get more expensive every quarter. A CEO on Day 500 whose organization cannot state the company goal is not doing Phase Three work — he is doing Phase One work, late, against a team that has already decided how seriously to take him.
Why is EBITDA flat when revenue is growing? Usually because the business is expanding rather than growing: the incremental revenue is arriving with complexity attached — one-off pricing, added configurations, small orders that consume disproportionate capacity — and the cost of serving it never appears as its own line item. It hides in capacity, cycle time and unrevisited discounts until the margin curve crosses the revenue curve.
How much EBITDA growth does a PE deal require today? A deal underwritten today generally needs 10–12% annual EBITDA growth to return what the sponsor promised, against roughly 5% a decade ago. With multiple expansion no longer reliably available, that growth has to come out of the operation rather than the market.
Find out where you are on the clock.
The Board’s Number calculator reconstructs the underwriting behind your deal — entry EBITDA, entry multiple, target MOIC, hold period — and solves for the exit EBITDA you actually have to deliver. It takes about ten minutes and it produces the number this entire framework is organized around.
Run the Board’s Number calculator
Related
- The 1,000-Day Framework — the full four-phase method
- Get a Goal: The One Number That Runs Your Company — Phase One, the first of the four meetings
- Earn the Right to Grow: The Two-Line Ratio — Phase Two, the diagnostic
Full transcript
EP01 — The Clock: Why 1,000 Days Decides Everything
[00:01] A thousand days. That’s enough time to transform a company, but not enough time to waste. Welcome to the 1000 Day CEO, the podcast about decisive leadership, sustainable growth, and building a business that thrives beyond any one leader. Your host is Bill Canady. Let’s make every day count. >> I want to tell you about a conversation I had more times than I can count. It’s month 19, the CEO calls me. It’s a good operator, real credentials. He took a seat about a year ago at the company, and the sponsor brought him in for a business a little over $300 million. And he says, and I’m quoting him almost to be exact, because they all say the same version of this. He says, “Bill, I don’t understand it. Revenue’s up 11%. We’ve had a record 2 months. I just got off the board call where I could feel the temperature change.” So, I asked him one question. I asked him what about his EBITDA, what it done over the same period. I look, it was It was a long pause, and he goes, “Well, it’s about flat.” Well, there it is. That’s the whole conversation. Revenue up 11, EBITDA flat. And the board has stopped asking how it’s going and started asking what the plan is. Two calls later, he’s got a co-pilot he didn’t ask for. Two quarters later, someone else has his office. Now, he didn’t fail. He worked harder than anyone in that building. He just spent 19 months making the business bigger without making it better. And by the time the scoreboard told him, the clock had already taken most of what he had left. Now, that’s not a story about a bad CEO. This is a story about a man who didn’t know the game he was playing. So, let me start with a proof. Roughly 70 CEOs running private equity-backed companies get replaced during the hold. And they’re not fired for cause, they’re replaced. They don’t happen to evenly across 5 or 6 years. They bunch up hard between months 18 and months 24, typically. Now, sometimes you get what I call a infant sudden death, right? They come in within about 90 days, so it just doesn’t work
[02:03] out. The team rejects them. But, typically, they get about a year and it’s not working out. The board starts working on it. This is a very specific window and something happens in that window and it’s happening on purpose and it’s noble in advance. Here’s the other number and this one is the reason the first one is getting worse. A deal underwritten today generally needs the business to grow even out between 10 and 12% a year to return what the sponsor promised. Now, go back a decade or so and that figure was closer to five. 12’s the new five. You know, they say, you know, 50’s the new 40. Well, 12’s the new five here. It’s the same operator, same companies, more than double the required slow. And multiple expansion isn’t showing up to bail anyone out anymore. Ever since interest rates going up so much, the multiple expansion can’t be counted on to be automatic. It has to come out of the operation and it has to come out of you. Now, here’s my promise. By the end of the next half hour, you’ll be able to look at your own hold period, whatever day of it you’re standing right now, and tell me exactly which phase you’re in. What that phase is supposed to produce and whether you’re on pace or behind. Not a feeling, it’s a location. You’ll know where you are on the clock. And here’s the plan. Four phases, 1,000 days, cut into four pieces, each one with a deliverable and a deadline. I’ll walk you through all four, tell you what each one is actually for, and tell you the specific ways operators lose each one. By the end, you’ll have a diagnosis of your own business and you can run this weekend on the back of a napkin. This is a 1,000-day CEO. I’m Bill Canady and let’s get into it. Let’s start with the number in the title because it’s not marketing, it’s arithmetic. When a sponsor buys a company, they tend to buy it with the exit already in mind. The model has a date on it. Call it 5 years, sometimes 6. Holds are stretched, there’s no doubt about it. They’re the longest they’ve been in 25 years. But the part of that
[04:04] hold where you can actually change the outcome is not 5 years. It’s the front end of it. Roughly about 1,000 days. Because by that time, you’re inside the last stretch. You’re not building value anymore. You’re presenting it. The diligence is running. The numbers you’re going to be sold on are the numbers you’ve already made. 1,000 days, 2 years, 9 months, near enough. We like to say it’s 3 years, uh but 1,000 days sounds pretty cool, so we tend to to stick with that. Uh and when companies when sponsors are putting together the actual company, they’re looking at a 3-year hold period. The reality is the hold periods today are over 7 years. But when you’re doing the math, sooner is better, right? So that’s your window to take a business someone has already paid a full price for and make it worth a premium. Now here’s what almost no one tells you when you take the seat. Those 1,000 days are not one long stretch of running the company. They are four completely different jobs done in sequence, and the skills that you win the first one will actively lose you the third one. Now that’s the trap. That’s the whole trap, and I want you to hear it clearly because it explains almost every replacement I’ve ever watched. The CEO that gets hired into a PE-backed CEO is usually hired for one specific quality. They’re closed. They’re decisive. They’re commercial. They know how to get revenue. So they arrive on day one, and they’re doing the thing they’re good at. They go get you revenue. And it works. For a while. It really works. Quarter three and four look great. Revenues climbing, the board is pleased. And underneath it, quietly, the business is getting more complicated every week. More customers, more SKUs, more one-off pricing, more exceptions, more configuration, more small orders from some accounts from these tiny little accounts that somebody in operations is now spending a Tuesday afternoon expediting. And none of that shows up a line on your P&L. There is no expense category called too much stuff. So, it hides. It hides in capacity, it hides in cycle time, it
[06:05] hides in the 14% discount somebody gave a customer in 2019 that no one’s ever revisited. We’ve all seen those. It’s like, “How did that get here?” They kind of get in here and they hang out for a while. Then someone around month 15, the growth curve flattens, somewhere in that period, because you’ve run out of capacity, not out of demand, and the margin curve, which has been drifting down the whole time, finally crosses in front of the revenue curve, where everybody can see it. That’s the month 19 phone phone call. Every time. And I want to be fair to that CEO, because I was that CEO. Early in my career, I ran a business where I could show you revenue chart that would make you want to invest. And a margin chart I would have preferred you didn’t ask about. I thought the second chart was an accounting problem. It was not an accounting problem. It was a design problem, and I had designed it myself, one accommodating yes at a time. Here’s the piece I want you to sit on for a sec, because it’s the difference between this being a story about luck and this being a story about work. There’s a line I used to constantly that I use constantly and I’ll use it this this season. Luck is the residue of design. And Branch Rickey said about baseball, it’s truer about operating companies than it ever was about baseball. Every CEO I’ve watched deliver a premium exit will, if you buy them a drink, tell you that they got lucky. The market turned, competitor stumbled, a strategic buyer showed up with a reason to overpay. And that’s all true, but it’s not the explanation. The explanation is that when the luck arrived, when the business was in condition to catch it, clean segments, real margin, a team that could run without the CEO in the room, that’s not luck, that’s residual. Somebody designed that on purpose, on a schedule, starting on day one. And the CEOs got replaced, a lot of them would tell you they got unlucky. Also true. Also not the explanation. The luck came for both of them. Only one was built to hold it. A thousand days of the design. Let me give you the four phases. They’re first day one to 100, then you
[08:06] go through the rest of the year, day 101 to 365. That closes out your first year. Now you got days 366 through 730. Day 731 to 1,000, that’s the end game. That’s when all the work you’ve done, particularly at the beginning, starting to show fruit. Each one has exactly one job, each one of these areas, and exactly one deliverable. And if you don’t finish the deliverable, you don’t get to start the next phase. You just carry the debt forward and pay for it later at a much worse rate. Now, phase one, day one to 100. This is where we get command and control. The job is command, not strategy, command. The deliverable is that by day 100, every person in that building can tell you the goal, the strategy, and who owns what. Not approximately, verbatim. Here’s the mistake, and it’s an understandable one. A thoughtful new CEO arrives and says correctly, “I don’t know enough yet. I’m going to spend 90 days listening.” And they do. And they do a listening tour. They visit every plant, have 120 one-on-ones. Generally good leadership behavior, and it’s the exactly the wrong thing to do with the only clean pass you’re ever going to get. Because here’s what a good listening tour communicates, whatever you intend. Nothing has changed yet, and the organization is watching very carefully for whether something has changed, because until they see it, every single person is running the old playbook, while telling you in the one-on-ones that they’re excited about the new direction. You get one clean pass at establishing command. One. And on day 101, you are no longer than new CEO, you’re just the CEO. And everything you didn’t change in the first 100 days is now something you’re endorsing. You own it. So, phase one is four meetings, and I’m going to spend the next entire episode on the first one because it’s the one people get wrong worse. Get the goal, set the strategy, reorganize the company, take action. It’s four meetings, 100 days, and at the end of the organization knows a new era
[10:08] has started. Now, the failure mode for phase one is a laundry list. 25 initiatives. I’ve seen the deck. It’s beautiful. It’s comprehensive. Every function is represented so no one’s feelings get hurt. And it’s functionally identical to having no plan at all. If everything is a priority, your organization will pick its own priorities, and I promise you they will pick the comfortable ones. Now, phase two, right? We talked about this earlier. Days 101 to day 365. That’s the rest of that year. Earn the right to grow. This is when the job changes completely, and this is where the closer starts to struggle. The job in phase two is not growth. The job in phase two is become the kind of business that can grow profitably, and then, only then, to grow. The deliverables margin, EBITDA, and cash visibility turn by day 365. So, by the end of that first year, you got to be nailing the margin. You got to be on that path. You can’t give up all the top line in doing it. So, it’s not a turnaround, it’s turn. You’re not planning to do it, you got to get it turned. Here’s the principle, and it’s the one that names the whole phase. Most CEOs try to grow before they earned it. And when you grow a business that hasn’t earned it, you don’t get growth, you get expansion. The business gets bigger, more complicated, and less profitable at the same time. You’ve scaled the dysfunction. I always say a baby doesn’t make a bad marriage better. In fact, makes it makes it complex. Now you have more of exactly the thing that was already hurting. Growth without profitability isn’t growth. It’s acceleration into a wall. And earn the right to grow is not a moral statement. I want to be clear about that because it sounds like one. It sounds like I’m saying you only deserve what you work for. That’s not it at all. It’s a statement about possibilities. A business below a certain operating threshold will not convert incremental revenue into incremental profit. It will convert into incremental cost. It’s not a value judgment. It’s a machine and you can
[12:08] measure it. There’s a ratio. It takes two lines off your P&L in about 30 minutes and it will tell you flatly whether you’re on the growth track or the fix first track. Now that’s episode four and if you only listen to one episode this season, make it that one. Phase two is where the set Phase two is where you segment the business and find out where profit actually lives. It’s where you find your quad four. The bottom value customers buying bottom value products and discover that 4% of your revenue is eating somewhere between 20 and 40% of your capacity. It’s where you fix the price. It’s where the fastest lever you will ever touch. It’s where you can find this. It’s where you rebuild the budget from zero instead of from last year because last year’s plus 5% is how you lock in every bad decision you’ve ever made. The failure mode for phase two is flinching. You will build the analysis. You will see the tail clearly and then somebody in the room will say this sentence, “But that’s still $4 million of revenue.” And if you flinch there, the whole phase is decoration. That’s 4% isn’t the cost, the 4% is the bait. Now we’re going to phase three. That’s day 366 to day 730. Scale what matters, right? We’ve earned it. Now let’s go get the thing that’s really going to work. So, now you grow and now the job changes again and this is the transition that ends more CEO tenures than any other. Because phase one and phase two, you can do largely on your own force. You can push 100 days of command through sheer presence. You can push a simplification agenda through by being the most stubborn person in the room. Phase three, you can’t do it that way. Phase three is the phase where business has to run without you in the room. And if the only functioning system in that company is your personal attention, you’ve just hit your ceiling. And the ceiling isn’t the market, it’s you. The deliverable for phase three is a flywheel by day 730. Growth that continues when you’re on a plane. A leadership team where each person owns a
[14:09] number and presents it themselves. An operating cadence weekly, monthly, quarterly that runs whether or not you’re feeling energetic that week. That’s the team and the cadence. Episode 89. Now, the failure mode for phase three is the hero CEO. The one who’s got it all figured out. They know what they’re doing. If you feel like the chief everything officer, not because you’re a micromanager, most of the CEOs who feel that way are the opposite of micro. They’re carrying the load because the architecture was never designed to carry it without them. That’s a designing problem, not a character flaw, and it’s fixable. But it’s fixable in phase three, not in phase four when the buyer’s advisor is asking, “Who else can run this?” So, now we’re on phase four. That’s day 731 to day 1,000. Yeah, I call that always be exiting. ABE, always be exiting. It’s the last phase and the job is the premium. And here’s the thing about the premium I need you to internalize because it changes what you do on a choose. Enterprise value is EBITDA times a multiple. Every operator alive understands the first term. Almost nobody works on the second one on purpose. The multiple here is not handed to you by the market. It is substantially a function of how risky your business looks to someone who is to write a check and then live with what they bought. Customer concentration, owner dependency, where the forecast has ever been right, where the management team survives your departure. All of that is inside your control and all of it is worth its turns. Now, that’s why the phases are ordered the way they are. Margin and cash moves first because they’re the fastest. The multiple re-rates last because it re-rates only once the business is actually de-risked. And de-risking takes two years you spent building the team and the cadence. You can’t sprint it to the last 90 days. If you’re not there by last 90 days, you’re just polishing. You can’t get there in time. Everybody tries. It never works. Buyers
[16:10] can smell a business that got tidied up for the sale and they price it accordingly. The failure mode for phase four is treating the business like it’s your baby. Now, I’m going to be blunt about this one because it costs people real money. It’s not your baby. Inside the structure, the company is a product and a product exists to be sold in the best possible condition at the best possible moment. The operators who make the who make peace with this early make dramatically more money than the ones who make peace with it in the data room. So, four phases, command by day 100, cash by day 365, the fly will where rocking it by 730, and the premium by day 1,000. Then you’re ready. Now, roll into act three, the plan. Now, let’s make this useful because a framework for you can’t act on it is entertainment. And I’d rather you get paid. So, three moves you can run all three this weekend and the first one takes about four minutes. Move number one, locate yourself on your clock. Where are you in the journey? Get the actual date the deal closed, not the date you started, the date the sponsor closed. Count the days to the day. Write that number down, then write down which number, which phase you’re in. I want to warn you about the reaction because it’s almost universal. People are further along than they think. Someone who feels like they’re just getting started turns out to be on day 308. You need to know where you’re at. Now, that’s not phase one anymore. That means phase one is over and whatever command you established is the command you have. This is uncomfortable and it’s supposed to be. You cannot manage a clock you refuse to read. Now, you go to move two. Grade the phase you just finished. Every phase before your current one has a deliverable. Go grade it honestly, alone on paper where nobody’s watching and you don’t have to defend it. In phase one, it was command. Can you pick three people at random from your building and state the company goal in one sentence? Can they do it? Can you pick those three people without them looking it up? Not the mission statement, the goal. If you’re not sure,
[18:11] go find out this week. Walk out onto the floor. Ask three people. What they say back is your actual grade. Phase two, cash. Is EBITDA in dollars higher than it was 12 months ago? And can you name two specific decisions that moved it? Revenue doesn’t count here, neither does the market was better. Two decisions. Name them. Phase three, the flywheel. If you were unreachable for 30 days, what breaks? Sit with that one. Write the actual list. That’s your phase three work order. And it’s usually shorter and more specific than people expect. It’s rarely everything. It’s usually four decisions that only you can make. Whatever phase you fail, that’s your real work. Not the phase you’re in, the phase you skipped. This is the single most important idea in this episode. You cannot skip a phase. You can only defer it. And deferred phases get more expensive every quarter. A CEO on day 500 who never established command is not doing phase three work. He’s doing phase one work, late. Against a team that has already decided how much of him they need to take seriously. Okay, you third move, pick the one thing and put it on the calendar. One, not five. Take the earliest phase you failed, take it as a deliverable, and convert it into a single day commitment in the next 30 days. Not a project, a date and an outcome. If phase one is what you failed, a leadership meeting on the calendar this month that ends with one written goal and named owners, that’s episode two. If phase two is what you failed, the right to grow ratio calculates off your actual P&L by the 15th. Two lines, 30 minutes, that’s episode four. If phase three is what you failed, the 30-day break list and one item off of it permanently assigned, the named human being who is not you by month end, that’s all you got to do. Go name someone to do it. Now, one commitment dated, and here’s the part that makes it real. Tell somebody. Tell your CFO. Tell your
[20:13] sponsor. Tell your spouse. An undated intention is a wish, and I have never once seen a wish move an income statement. Now, what’s it look like when it’s working and when it’s theater? When it’s working, it’s boring. That’s the tell. The scoreboard are the same five to 10 different numbers every week, the same people presenting their own numbers. Variances get called as an encounter metric, not objectives, not adjectives. Nobody is surprised in a board meeting ever because bad news travels fast in a company where it’s safe to move it. When it’s theater, it’s exciting. Big kickoff, great debt, new name for the program, lots of energy in the first six weeks, and then the cadence starts to slip. The week gets moved for a customer visit and moved again, then it’s every other week, and by the second quarter, nobody can tell you what the goal is because it changed twice, and neither change was announced. Boring is the goal. Boring compounds. Exciting is what you do instead of work. All right, last piece of it here. Three things worth keeping from this one. One, you have to have about a thousand days that matters and they are four different jobs, not one. Command by day 100, cash by day 365, the fly wheel by day 730, and the premium by day 1000. The skills that win you phase one will lose you phase three if you don’t put them back down and pick up different Second, you can’t skip a phase. You can only defer it and deferred phases get more expensive every single quarter. If you’re on day 500 and nobody in your building can state the goal, you don’t have a growth problem. You have a phase one problem and you’re paying interest on it. Okay, third, 70% of CEOs get replaced and it clusters around month 18 to month 24. It’s not a coincidence and it’s not bad luck. That’s the moment the second phase bill comes due and the bill arrives arrives for a year of expansion that got mistaken for growth. Which brings me back to where I started. Luck is the residual of desire.
[22:13] You will get lucky perhaps, but don’t count on it. A competitor is going to stumble or strategic buyer is going to show up with a reason to pay too much or a market is going to turn your way for reasons that have nothing to do with you. That’s common. The only question that matters is whether on the day it arrives, your business is in condition to catch it. Clean segments, real margin a team that runs without you in the room. That condition doesn’t happen in the last 90 days, it happens because somebody started designing it on day one. You got a thousand days, go figure out which one you’re standing on. Okay, next week we’ll all get all the way back to day one. We do our first of the four meetings, get a goal. It’s the meeting almost every CEO thinks they’ve already had and almost none of them have actually had. I’ll tell you about a $150 million manufacturer that walked out of the meeting with one goal and two moves and put $6 million of EBITDA on the board in 9 months. And I’ll tell you why that version was 25 and this is producing nothing at all. If you want to run the diagnostics from today’s episode, the clock counts in the three-phase grade. It’s on the side at the 8020 institute.com. It’s one page, there’s no pitch, no form to fill out. Takes about 30 minutes. Just the questions and a place to write the answers down, which is the part that matters. I’m Bill Canady. Go run your numbers. >> You’ve been listening to the 1000 Day CEO with Bill Canady. Follow the show for more decisive leadership, sustainable growth, and strategies that build enduring businesses. Until next time, make every day count.
