Most owners start exit prep six months before they want to sell. That’s about a year too late.
I talk to business owners every week who are “thinking about an exit in the next year or two.” When I ask what they’ve done to prepare, the answer is almost always the same: they’ve thought about a number they’d like to get. That’s not preparation. That’s a wish with a dollar sign on it.
Real exit prep is work you do on the business so that a stranger can look at it, verify what you claim, and pay for what they find. Here’s what that actually looks like.
Clean Financials Come First — Every Time
Nothing kills a deal faster than financial statements a buyer can’t reconcile. Before any conversation with a buyer or their banker, an owner should have:
- 3 years of P&Ls and balance sheets, reconciled to tax returns
- A clear add-back schedule with documentation behind every adjustment
- Revenue broken out so anyone can see where it actually comes from
- A list of every related-party transaction, disclosed up front
If your accountant is the only person on earth who understands your books, that’s not a moat — it’s a discount. Buyers price uncertainty, and they price it aggressively.
Kill the Owner Dependency Before Someone Pays For It
The single largest value driver an owner controls is how much the business needs them. If every client relationship lives in your head and every vendor call routes to your cell phone, a buyer isn’t buying a business — they’re buying you, and they know you’re leaving.
The prep work is concrete:
- Document the operating rhythm: how work comes in, gets done, and gets paid
- Put names to client relationships that aren’t yours and build the habit
- Give a real person authority to handle what only you handle today
- Take a two-week disconnection test and see what breaks
That last one is the honest audit. Whatever breaks in two weeks is what your buyer will discount.
Look At The Business Like The Buyer Will
Buyers run the same five screens on nearly every deal. Owners who run them on themselves first walk into negotiations with no surprises:
- Customer concentration — does any client represent more than 15% of revenue?
- Revenue quality — is it recurring, repeat, or a treadmill that resets to zero every month?
- Financial hygiene — can the numbers be verified without a fight?
- Legal and compliance — leases, licenses, contracts: assignable and current?
- Team depth — who stays, and is anyone a second key person risk?
The owners who score honestly on those five screens usually discover a to-do list worth more than any multiple they were hoping for. Fixing one concentrated customer relationship or one unassignable license can move the outcome more than a year of strong sales.
The Prep Timeline Nobody Follows
Twelve months out, get the financials clean and start documenting. Six months out, run the buyer screens on yourself and fix what you can fix. Three months out, assemble the story — the growth narrative, the numbers, the proof — so a buyer sees momentum, not homework.
Owners who flip that order — conversation first, cleanup later — end up negotiating price, then renegotiating after diligence finds everything they knew was there.
The Bottom Line
Exit prep isn’t paperwork. It’s building a business a stranger can verify, run, and want. The owners who start early don’t just get better multiples — they get through diligence without the price getting cut, and they get their life back sooner.
If you’re more than a year from a sale, you’re not early. You’re right on time to start.
Life and Times Partners works with business owners across New York, New Jersey, and Connecticut on exit readiness, valuation, and going to market the right way. If you’re starting to think about what your business looks like to a buyer, start the conversation at c-lifeandpartners.com.