Five Keys to Successful Exit Planning – 5 – Being Prepared

Five keys to successful exit planning. Being prepared.

In the first four parts of this five part series discussing five keys to successful exit planning for businesses, we’ve covered the first four keys. First was the importance of taking care of your people. Then we discussed why ensuring that you leave behind a positive legacy is important. We then focused in on how to think about acceptable deal components before getting to the negotiation table. We then spent some time talking about how to determine the right timing for the exit and what the exit timeline might look like.

The final key puts all of those considerations and more together. The final key is being prepared.

#5 – Proper Preparation

The military has a special phrase to refer to the importance of planning and preparation that it refers to as the “Seven P’s”:  Proper Prior Planning Prevents Piss Poor Performance.  Making sure you are properly prepared for your exit cannot be overstated enough.  Here are some key factors to look into as you are conducting your exit planning.


No other single item in an acquisition can scuttle a deal faster than messy, inconsistent, or otherwise unsupportable financial data.  If your books look off, the deal may be off.  While many companies have strong accounting and bookkeeping practices and maintain their books well, other companies, especially those in the lower- and mid-markets may not be as clean and neat.  It may not be a terminal issue, but it needs to be addressed.

First stop is to get your advisory firm to have a look.  They have the experience to be able to tell you whether your books are clean, workable, or need some extra TLC.  Something they may suggest is to get an independent accounting or CPA firm to audit or review your financials and get them properly prepared for presentation as part of an exit process.

Your Tax Returns are not Your Financials

Next thing to keep in mind is that the financials that you prepared for tax purposes may not be the same as what you present for buyout purposes.  Everyone works to minimize their tax liability and uses every loophole they can find to make that happen.  But when you are looking for the best possible valuable for your business, those same loopholes that minimized taxes may also lower your market value. 

Five Keys to Successful Exit Planning – Ensuring that you have your business’s financial reports in order is one of the most common ways for a deal to go wrong.


Leadership Transition Plan

Thinking back to the people and legacy topics, those are directly related to whether your company is prepared for an exit or not.  Even if you will be staying with the company for another 3, 6, 12 or even 24 months, eventually you will be leaving.  You need a leadership transition plan. A company with a strong leadership transition plan is more ready to exit than one without.  And a leadership transition or succession plan is actually something that smart business operators put in place as a matter of course.

Product or Service Roadmap

From a product perspective, how far out does your product roadmap or your product development plan go? The more robust the product plan, the more likely the company will continue on a successful path even after an exit.  If the company lacks a roadmap or development plan, you should assemble one before you look for a suitor. It needs to be a real plan with real ideas and real paths and timelines to achievement of those ideas.

Marketing Planning

Having a marketing plan that is ready for execution not only makes your company better prepared for a transition, it also makes it potentially more valuable. If you have a growth plan, a story that you can tell about how the company will continue to grow, then it will be a more compelling target for buyers.

  • Is your marketing up to date?
  • Do you have a professional, attractive website that accurately reflects your company? 
  • Does it portray what you think are the best parts of the company? 
  • How does your company look on social media?
  • Do you at least have a LinkedIn presence? If not, you should. 

These are the places where other companies or investors are going to look at you first.  They will gladly review the materials provided to them by your advisor, but if the company lacks a professional presence out on the web, it will either cost you a potential suitor or a discount off your desired purchase package.

Continuing Operations Plan

How well prepared is your company to continue operations through an exit transition? Once your company starts the exit process it needs to be able to stay focused on delivering the same quality of products and services that it provided to customers before the exit planning began.

Part of the People section talked about making sure that your team members are being taken care of through the transition.  This is also one of the most powerful ways to ensure that they remain focused on operations through the transition.  If they know they are going to continue to have a job, or they are part of a leadership transition, or perhaps they even have an opportunity to earn equity on the backside of the transition, then they will continue to perform as they have and you may even be or continue to be revered after you leave.

Five Keys to Successful Exit Planning – You need to make sure that your company is prepared to continue growing even after being acquired.

Some of the most complicated contracts there are get assembled when a company gets sold or purchased.  Regardless of whether it is an asset or stock sale, the process of buying a company and ensuring that it is delivered as expected comes with a lot of inspections, assurances and contractual terms.  Being prepared for them ahead of time will make the due diligence and closing processes go smoother and faster.

Get a Due Diligence Checklist

The first step to take is to get from either your legal team or from your advisors a typical due diligence checklist for a company like yours or for your particular industry.  The due diligence process is used for a buyer to inspect your company, much like you would inspect a house that you want to buy before you buy it.  Get the checklist and work through it like you were buying your company.  Determine what kinds of records or materials or people need to be available and prepared for the process and have a plan for this in advance.

Find out about Representations and Warranties

Next, talk with your advisors and/or your legal counsel and get that portion of a business purchase agreement known as the “representations and warranties” section.  Review it with your advisor and attorney and understand what kinds of things are typically requested from you in the contract. 

Representations and warranties will typically include assurances related to record keeping, legal compliance, lawsuits and other possible liabilities, insurance, licensing, taxes, condition of equipment, indebtedness, and more.  They can also vary depending upon the type of company or industry you are in.

Five Keys to Successful Exit Planning – Getting prepared for the legal process of the sales process is important to a smooth and succession exit process.


Properly exiting from a business that you have most likely been building up over a period of years is, in a lot of ways, not as easy as it seems.  You will need the assistance of some of the usual advisors, including your lawyer, your accountant, your financial and/or tax advisor, and possibly also your banker and insurance broker.

But even more important than all of those, and the ones who will truly enable you to navigate the exit process successfully, are your mergers and acquisitions (M&A) advisors.  These are the advisors that are experienced specifically in all of the topics that have been covered in this article and more.  They have experience with how the process works, when each of the various advisors needs to be consulted, and they have a methodology for ensuring that you get the best possible exit package from the suitor that is most favorable to your desires and plans.

Choosing a Good M&A Advisor

When you choose your M&A advisors you need to consider several factors.

Time in Business

First – how long have they been in the business?  Good advisors have been involved in multiple deals that are similar in size or complexity to what you expect to encounter for your company. 

You should interview them about some of the concepts in this article and understand how prepared they are to guide you through the process. A solid advisor will understand the exit planning considerations in this article and easily be able to talk with you about how to apply them to your specific situation.


Second, you should get a good understanding of their M&A methodology.  How do they approach the process of evaluating your business, determining a market price, preparing it to be marketed, working through the deal process, and getting you to closing?  Do they pick specific strategic buyers that might be interested in your business or do they mass market your business. 

For smaller businesses the latter is typical and acceptable.  For larger businesses that have annual revenues exceeding $5 million, you will be better served by a company that works to find strategic buyers that would be interested in, would benefit from the acquisition of, and would be able to afford your company.

Fit / Personal Comfort

Five Keys to Successful Exit Planning – Getting a solid M&A Advisor is one of the most important ways to ensure a successful exit from your business.


We’ve touched on this a few times and in different ways, but the most important part of preparing for an exit is you. 

The first thing you must do is simply make the decision to sell and to not change your mind about it.  One of the worst things you can do is to vacillate between selling and not selling, planning or waiting, preparing or delaying. 

Something that will help in this regard is to have a post-exit vision.  As discussed previously, that may be retiring and traveling, or it might be taking some time off to decompress before heading into your next act. Either way, knowing what comes next is a powerful way to stay motivated and driven right through the process.

Next, you should immediately seek out a compatible M&A advisor.  Handling the preparations with an advisor that keeps you focused on the exit and doesn’t allow for the indecision and uncertainty that comes with doing something for the first time will keep you focused and will make the process move faster. 

Five Keys to Successful Exit Planning – Being prepared to transition is a critical first step to a successful exit.


You’ve probably spent years building it.  It may represent your life’s work. Your success is tied not just to the past and the strength of the company you’ve built, it’s also tied to how skillfully you navigate the process of moving on.

Leverage the five key considerations in this article to guide you to a strong exit from your creation and look forward to a new future, a new you, and a new pursuit, leaving your company to continue its success without you.

Ready to Exit? Work with Us.

If you think you are ready to start discussing exit planning for your business, contact Navvee for assistance. Our services range from a simple review and advice on your plans to putting together a full strategy, to assisting with the legal work involved for the deal, to, with direct support from our partners at True North Mergers & Acquisitions, acting as your M&A Advisor and directly assisting with finding appropriate buyers and getting you the best deal for your legacy.

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