Key Takeaways

  • Akoya Capital Managing Director Carr Preston treats solo plant tours as a major red flag when evaluating founder-owned businesses.
  • Strong operating executives delegate prospective investor walkthroughs to the VP of Operations or COO rather than narrating every station themselves.
  • Frontline employee behavior during site visits, specifically eye contact and comfort speaking up, indicates whether a culture can handle professionalization.
  • Monopolized management meetings signal high key-person risk, exposing companies that run on top-down instruction rather than scalable team consensus.

The Plant Tour Delegation Test

Private equity diligence often breaks down because investors focus entirely on spreadsheets and miss executive control traps. When Akoya Capital tours a target facility, Carr Preston looks closely at who leads the group through the building.

In healthy businesses, the founder steps aside. The VP of Operations or the COO walks prospective buyers through the lines, explains the equipment, and answers technical questions without checking over their shoulder. When the chief executive insists on running the entire walkthrough alone, it signals a lack of trust in the executive bench.

As Preston puts it: “One that we always look at is we do a lot of manager meetings. And if the CEO is kind of leading the plant tour versus the VP of ops or the COO because you like someone else kind of being able to do that and they have trust and confidence because you're bringing through a prospective investor.”

If the top executive cannot trust functional leaders in front of prospective capital partners, they will struggle to delegate capital allocation, hiring, or capacity expansion post-close.

Reading the Shop Floor

Site visits reveal operational dynamics that management presentations conceal. Preston evaluates how facility staff respond when leadership walks the floor. Do workers make direct eye contact and greet leadership, or do they look down and tense up?

“Are you making eye contact? Are you speaking to the employees and people that are working in the facility? And what's that dynamic or what's that kind of vibe like?” Preston notes.

Host Sean Mooney points out that top-down leadership creates operational fragility across the entire organization: “If you're in a management meeting and the CEO is the only one talking it creates so much risk.” When a founder cuts off functional leaders or answers every question directed at finance and sales, the firm is buying an individual rather than an enterprise.

Preston observes that shifting away from command-and-control is the hardest hurdle in middle-market buyouts: “One of the hardest things to do in this business is kind of a cultural transformation and that's got to be part of it because one of the things that we need to do and have to do is take that family held business and start to professionalize it.”

Why It Matters

Middle-market valuations reflect sustainable systems, not individual heroics. When sponsor-backed buyers encounter businesses built entirely around an authoritarian founder, underwriting must account for executive search costs, extended transition timelines, and inevitable post-close retention shocks across the rank and file.