When Steve Hall sold his business, driversselect, to a public company in 2017, the used car dealership chain was bringing in US$500 million a year.

Hall stayed on to ensure a smooth transition and by the time he left in 2019, the company had scaled organically to approximately US$1.1 billion with no outside capital or long-term debt. driverselect was able to achieve a substantial pricing advantage over competitors through inventory turns three-to-five times the industry average.

That happened because he passed the torch successfully, just like an Olympic torchbearer. That torch was the soul of the business, a culture he named CARE – Caring Acts Randomly Expressed.

Hall attributes the enduring advantage that powered the firm’s successful scaleup and exit to a culture of caring for all stakeholders – team members, employees and customers – believing it caused them each to give the company something they would not contribute to competitors.

“Employees and suppliers, key trade partners, customers – they all felt cared for and had a lot of trust in one another,” he says. “And when you build trust, especially in an industry that operates in low trust, there’s a compounding effect to that.”

Hall’s story of a successful handoff is unusual. In my 44 years of working closely with entrepreneurs, one of the saddest things I’ve seen is when leaders exit the business, only to see it die.

It’s not as if the private equity firms and strategic buyers who acquire the business want to buy a company and kill it. That would be financial suicide. But somehow, many of these buyers inadvertently do that.

Passing the torch – the soul

As a result, I’ve been exploring the root issue – it’s because no-one passes the torch. The only way the founder can confidently step aside is if they know what the soul of the business is, so they can communicate it to buyers and successors.

Most don’t. When I ask entrepreneurs what the soul of their organization is, they all say the same thing: “No-one has ever asked me that question.”

Almost every business leader I meet who has had some kind of success declares they’ve put their heart and soul in the business. We understand the heart piece of that, but what’s the soul?

Soul is how we deliver our product or service, how we deliver on our promise and how we deliver on our purpose. It’s usually something the founder does that almost seems irrational.

To most people from the outside, it doesn’t make short-term financial sense, but it’s part of the magic of the business, and the founder guards it almost fanatically.

At driversselect, Hall’s commitment to CARE took many forms. At the company’s huddles, for instance, there would be a daily check-in, where the leader would ask each team member to share how ‘all in’ they were on a scale of one to 10 that day.

Most people gave eights or nines, but if someone said he was a ‘four’ that day because his wife was getting surgery, everyone would understand he might be checking his phone and not interpret it as lack of commitment.

Meet the truckers

Another example came when an executive in the acquiring corporation asked Hall how the company shipped its inventory so inexpensively. Hall referred the executive to the trucker dropping off cars in the parking lot.

The trucker explained that when he drove all weekend to deliver cars quickly, at most dealerships no-one was there to greet him. Someone would usually come out and yell at him that the truck was parked the wrong way. He’d have to chase payments, so he priced his services accordingly.

At driversselect, in contrast, someone called the driver ahead of time to tell him where to drop off the cars, greeted him when he arrived and invited him to hang out in the employee break room for tacos or pizzas and to pack some snacks for the ride back.

“I just feel like part of the team and they care,” the driver explained. “So I feel good about that. And I want to help those guys.”

Partner with the detailer

In another case in point, driversselect outsourced its detailing to small, mom-and-pop businesses near each dealership. Often, these shops had trouble with staffing, because the volume of cars changed from week to week.

Hall’s team sat down with them and shared the company’s monthly, quarterly and annual goals, and agreed to cover the price of staffing for that many cars – and wear the cost if it underutilized their services.

To make sure the detailers were motivated to do their best work, driversselect included detailers’ teams in its own leadership development programs and team recognition awards.

Measures like this might seem almost fanatical to an outsider, but they are part of the soul of the business. In many exits, there’s no-one devoted to carrying them forward. Then, when the flame goes out, everybody is surprised when, suddenly, the company dies. This is why.

So if you’re scaling with an exit in mind, make sure you know the soul of the business – and that there’s someone to pass the torch to, even if it’s you during an earn-out.

Scaling Up has created a free, one-page SOUL Tool to help leaders identify what it is, but a shortcut question to ask yourself is: What has been the key to your enduring success? Once you know the answer, be fanatical about protecting it and push back when behaviors drift, as Hall did.

Remember, the soul of your business, and its survival, is at stake.

For more information on Scaling Up Your Exit, click here.