Preparing Your Business for Sale: Maximizing Your Exit

If you're thinking about selling your business, even if it's a few years away, there’s something you need to know: most owners wait too long to prepare. By the time they start, they’ve already lost value, time, and leverage. In my experience, preparation makes the difference between a smooth exit and a failed deal.

Marcus’ $5M Exit: A Real-World Example

Marcus owned a commercial landscaping company in Maryland and spent 30 years building it from 2 to 50 employees. As his career progressed, he began to ask: Can I keep working forever? He was concerned about his legacy, and he didn’t know how to start the process.

That’s where I stepped in. We partnered on exit planning and conducted a sell‑side Quality of Earnings (QoE) report. We verified his financials and discovered that his company was worth 25% more than he expected. Fast forward to 2024—Marcus sold the business for $5 million. Today, he’s a full‑time grandpa, embracing a new chapter in his life.

That story illustrates why exit planning is so critical and how it benefits both buyers and sellers.

Start Early: Exit Planning Timeline (2‑5 Years Before Sale)

A critical early consideration in exit planning is the intended timeline. Serious sellers should begin preparing at least two to five years before listing the business.

During those years, focus on:

• Establishing goals

• Developing a transition plan

• Defining and strengthening value drivers

• Building predictable profitability

Many sellers treat exit planning as an afterthought. They regret not starting earlier, 75% of business owners do. Proper planning provides financial security and a smoother transition.

Clean up the House Before Listing

Messy financials will cost you. You might not see it in the asking price, but it will show up in buyer trust, deal delays, lender pushback, and lower multiples.

Many small business owners rely on year end tax prep. That may be fine for keeping the lights on, but it is not good enough for a sale. When buyers ask for monthly financials, they expect everything to tie back. They expect clarity.

If your monthly numbers do not reconcile with your tax return, if you run personal expenses through the business, or if your records are hard to follow, buyers will pull back. Banks will not fund it. And your deal might fall apart before it even begins.

If you want to increase your valuation, start with the numbers. Clean books lead to faster closes and better offers.

What Buyers Want and Why It Matters

One of the smartest investments you can make is a sell side quality of earnings report. This is not just about showing your numbers. It is about proving your numbers are real and that your earnings are sustainable.

A quality of earnings report does a few key things:

• Confirms your earnings before interest, taxes, depreciation, and amortization

• Normalizes your profit by removing one time items and owner expenses

• Shows buyers that you are transparent and serious about selling

When a seller who already has a quality of earnings report, I know they are credible. I know they care about the process. And I know they are probably going to close.

Why Sell‑Side QoE Makes a Difference

One of the most powerful tools you can build into your exit plan is a sell‑side Quality of Earnings report.

Here’s what it delivers:

• Verified EBITDA removes one‑time items or personal expenses

• Credibility, a signal that you’re serious and transparent

• Faster, higher‑value deals, buyers see professionalism, buyers write checks

When I work on deals, if a seller already has a QoE report, I immediately feel more confident about their financial records. It’s not just confirming they're clean—it’s telling a buyer: this business is real, reliable, and ready.

Watch the Full Webinar

If you'd like to dive deeper into everything I covered—real seller examples, deal structure insights, working capital breakdowns, and buyer Q&A—watch the full recording of the webinar below.

Deal Structure & SBA Financing

A number of my clients rely on SBA 7(a) loans in their exit structure. But SBA lenders are cautious—they require clean DSCR (debt service coverage ratio), typically 1.15 at minimum. I advise modeling closer to 1.65, which gives lenders comfort and helps secure full financing.

Other structural best practices include:

• Seller note provisions to help bridge valuation gaps

• Working capital peg with a look‑back to ensure fair value at close

• Flexible terms, not rigid take‑it‑or‑leave‑it demands

• Alignment with lender and buyer expectations

When deals are structured intelligently, SBA deals close faster and sellers get more certainty.

Avoid Common Pitfalls

During the webinar, I highlighted mistakes that frequently kill deals:

• Cherry‑picked valuation based on a single best year

• Poor documentation, financial or legal disorganization

• No sell‑side diligence ,buyers interpret that as risk

• Unrealistic terms, rigid LOIs or unreasonable expectations

• Misunderstanding working capital, deal dies in the LOI stage

The key theme: transparency. If you show you’ve cleaned up the data, done your homework, and have realistic expectations, buyers and banks lean in—not walk away.

Timing is Everything

Selling during the wrong market window can reduce your sale price. In 2021–2022, low interest rates powered higher valuations. In contrast, 2023–2025 has been more challenging for many industries.

If your business had a strong year in 2023, followed by weaker results in 2024, don’t rely only on the peak year. Showcase your 5–10 year average and trends. Aim to list when:

• Recent earnings are strong

• Industry and economic conditions are favorable

• You can show momentum or stability

• You’re confident in your timing—not rushed

If conditions aren’t great, pause the sale, regroup, and return during a stronger cycle.

Strategic vs. Financial Buyers

You should decide early: do you want a strategic buyer or a financial buyer?

• Strategic buyers (competitors, adjacent businesses) might offer synergies but pay only market multiples.

• Financial buyers (searchers, PE, solo investors) may pay more but demand clean structure and returns.

Each has pros and cons. Your SIM and negotiation strategy should align with whichever path you choose.

Further Reading

• “Exit Planning: 7 Smart Steps to Sell Your Business”
  by Lien DePau, Forbes (May 7, 2025) — A clear roadmap covering goals, valuation, and preparation tactics for business owners planning an exit.

• “Mastering the Art of Business Exit: Unlocking 7 Secrets to Maximize Your Sale”
  by Forbes Council (Oct 23, 2024) — Explains why exit planning is a multi‑year process and how it drives full financial potential.

• “Sell‑Side Quality of Earnings & The Benefits For Business Owners”
  in Axial Forum (c. 2023–2025) — Details how a QoE report verifies earnings, supports valuation, and smooths transaction timelines.

• “Quality of Earnings Report in Pre‑Sale Due Diligence”
  by Bradley Porter & Brett Sproul, Moss Adams (Jul 18, 2023; updated Mar 12, 2025) — Explains QoE process steps, from adjusted EBITDA to closing assistance.

• “Exit Considerations for Business Owners”
  by Weaver (Feb 2025) — Emphasizes sell‑side QoE’s role in identifying one‑time expenses and boosting credibility pre‑M&A.

• “Exit Planning: Transaction Advisory Services Sell‑Side Readiness”
  by RSM US (Feb 27, 2025) — Offers a staged framework for early preparation, mock diligence, and streamlined transaction execution.
  

Final Takeaways: Tell Your Story

Here’s the bottom line: selling your business is storytelling backed by data.

Buyers and lenders want to hear:

• Why you built the company

• What your legacy means

• The challenges you overcame

• How it impacts your team and community

• The good, bad, and ugly of the business

When you blend honest narrative with clean financials and a clear structure—you build trust. Trust creates more competitive offers and faster closings.

Contact us today to learn how we can support your next deal.