Exit planning
The sale price is mostly decided before the business goes to market.
Most owners start thinking about selling about six months before they want to be done. The gap between those two moments is where value is won or lost — and it is almost always measured in years, not months.
Why plan early
Buyers pay for certainty, and certainty takes time to build
Nothing about exit planning commits you to selling. It gives you a business that is worth more, runs better while you still own it, and is ready when the right moment or the right buyer arrives — including the moments you do not choose.
Health events, partnership changes, and unsolicited offers do not wait for a convenient year. Owners who have already done the work can respond to them. Owners who have not usually accept less, or accept a structure that keeps them tied to the business long after closing.
The work itself is unglamorous: cleaning up the books, reducing what only you can do, resolving the small issues that would otherwise surface at the worst possible moment in due diligence. Done over a few years, it is routine. Done in the last ninety days, it is a discount.
Timeline
A readiness runway
Work backward from when you want to be finished, not from when you want to start.
- 01
Five years out — build the business a buyer wants
Reduce owner dependence, broaden the customer base, and add recurring revenue where the model allows. Get a baseline valuation so you know the gap between today's value and the number you need.
- 02
Two years out — clean the record
Consistent monthly closes, a documented add-back schedule, and separated personal expenses. Renew or extend key leases and contracts so a buyer inherits term rather than uncertainty.
- 03
Twelve months out — prepare to go to market
Refresh the valuation, assemble the diligence file, resolve open legal or equipment issues, and lock in retention for the people the buyer will need.
- 04
Ninety days out — the quiet launch
Marketing package finalized, business presented blind to a screened buyer pool, and your attorney and accountant briefed and available for the pace due diligence sets.
Value drivers
What actually moves the number
These are the six areas buyers and their lenders examine hardest. Improvement in any of them is worth more than another good quarter.
Owner dependence
The single largest discount buyers apply. If the business needs you for sales, pricing, or the key customer relationships, they are buying a job rather than a company. Every responsibility you delegate and document raises the price.
Financial hygiene
Three years of reconciled, consistent statements with personal expenses clearly identified. Add-backs that are documented get credited; add-backs that are asserted get argued about.
Customer concentration
One customer at a third of revenue puts the whole deal at risk in a lender's eyes. Broadening the base takes years, which is exactly why it belongs in a long-range plan.
Recurring revenue
Contracts, maintenance plans, and renewing accounts convert unpredictable demand into a forecastable line. It is the most reliable way to move up a valuation multiple.
Documented processes
Written procedures, current systems, and a management layer that can run a week without you. Buyers pay for a business that transfers, not one that must be relearned.
Clean legal and asset records
Current leases, assignable contracts, clear equipment titles, resolved disputes, and organized corporate records. These rarely raise the price, but their absence regularly lowers it.
Checklist
Pre-sale readiness checklist
If you can produce all of this today, you are ready to go to market. If you cannot, each gap is a project with a timeline.
- Three years of reconciled financial statements and tax returns
- A written add-back schedule with supporting documentation
- Revenue reported by customer, so concentration is visible
- Current fixed-asset list with age and condition notes
- Signed leases with remaining term and assignment language reviewed
- Key employee agreements and any retention arrangements
- Documented procedures for the tasks only you perform today
- Corporate records, licenses, and permits current and organized
- Personal financial and tax plan for the proceeds, with your advisors
Exit planning runs alongside, not instead of, a valuation and the sale process. Sector-specific factors are covered on the industry pages.
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