Business Exit Strategy Planning for Founders: Strategies & Benchmarks
Founders spend years building a roadmap, tracking the right metrics, and tightening what works. Exit strategy planning deserves the same mindset. It is not a last-minute scramble when a buyer shows up. It is a set of decisions and upgrades that make your company easier to buy and easier to run without you.
At SHG, we often see the strongest outcomes when owners start three to five years before a sale, with clear benchmarks across cash flow, customer mix, and founder dependency. That approach turns the exit into a value-building program. This post covers the routes founders use, the benchmarks buyers watch, and the steps that move you toward a cleaner deal.
Get Clear on Your Exit Goals
Exit planning gets simpler once you define what success looks like for you, not just for a buyer. For many owners, most of their personal wealth is in the business, so the target needs to be personal and specific.
Start with a few clear calls.
- Your liquidity goal and timing
- Your role after the close and what you still want to own
- The tradeoffs you will accept on price, structure, and risk
Then back into the timeline.
Building value often takes years, not weeks. That means it’s best to start three to five years before a planned sale, so you have room to strengthen the driver's buyer's reward, and fix weak spots that show up in diligence. If interest comes in sooner, you still want to lead the process, which is why
engaging a mergers and acquisitions advisor before an offer can be the better play. A
readiness evaluation can help by scoring areas that buyers closely examine, including financial reporting, contracts, customer mix, and founder dependency.
Choose the Exit Path That Fits Your Business
There is no single best exit route. The right one depends on how your company creates cash flow today, how much growth runway buyers can underwrite, and how involved you want to stay after close. In sell-side work, pricing still starts with cash flow, and the story only holds if your reporting and projections can stand up in diligence.
A strategic buyer is often another operator. They may pay more when your business fits their plan, and they can justify synergies or faster market access. A financial buyer is often a private equity firm. They tend to pay for durable earnings, repeatable growth, and a team that can run day to day with less founder lift.
Internal and hybrid exits can be a better fit when continuity matters. A management buyout (MBO) keeps leadership in place, though it often relies on debt and deal structure to bridge the gap. An Employee Stock Ownership Plan (ESOP) is a qualified retirement plan that invests primarily in employer stock, supporting a partial or complete liquidity event while retaining ownership with employees over time. A recap is another common middle ground. You sell a control stake, keep meaningful ownership, and roll some proceeds into the next chapter.
A practical benchmark question is which path rewards the value driver you already have, and which path rewards the value driver you can build in the next 24 to 36 months.
Benchmarks That Move Enterprise Value
Exit readiness is measurable. A simple scorecard helps you spot what buyers will press on, then fix it while you still have time to control the story. Sell-side diligence works best when you surface issues early and address them before you go to market.
Financial Quality
Buyers value what they can verify. That starts with a consistent monthly close, clean schedules, and a transparent bridge from earnings before interest, taxes, depreciation and amortization (EBITDA) to adjusted EBITDA. A quality of earnings (QoE) report is designed to present normalized cash flow and explain adjustments in a way that withstands buyer review.
Working Capital And Cash Flow Mechanics
Net working capital (NWC) gets negotiated because it affects the cash a buyer needs to run the business after closing. Many deals use an NWC target, often called a peg, and then adjust the purchase price based on how actual NWC compares at close. If you know your normal range and can support it, this part of the deal tends to move faster.
Revenue Quality
Revenue durability is where buyers look for hidden risk. Customer concentration is a straightforward metric that can drive structure and pricing because over-reliance on a small set of customers can create volatility after ownership changes. Track it, explain it, and show how you are reducing it over time.
Operating System And Founder Dependency
A buyer wants proof that the business runs as a system, not as a founder hero story. That means a weekly rhythm, a short key performance indicator (KPI) pack, and clear ownership across the functions that drive results. When the team can execute without constant founder decisions, buyers tend to underwrite growth with more confidence.
Risk and diligence readiness
Treat risk review as part of the build, not a late-stage scramble. A targeted pre-sale review of legal items, tax posture, and core agreements can surface issues early and protect momentum once diligence begins.
Strategies That Close The Multiple Gap
Make your numbers buyer-ready. Buyers start with cash flow, then test whether your reporting and projections hold up under diligence. Clean monthly reporting, a tight forecast, and a QoE view can keep the buyer from rewriting your earnings story in their favor.
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Improve the quality of revenue. If you can shift work toward recurring contracts, buyers often view the business as easier to forecast. SHG has seen model shifts toward software-as-a-service (SaaS) and annual recurring revenue (ARR) translate into materially better outcomes when the company returns to market with steadier revenue.
Reduce concentration and key person risk. High customer concentration and founder dependency change how buyers price risk, even when earnings look strong. Research also links customer concentration to deal risk in mergers and acquisitions, which is why it shows up early in diligence questions. Building management depth and moving key relationships beyond the founder can narrow that discount.
Do a seller-side pre-check. A targeted sell-side diligence pass on financials and core documents can speed the process and protect momentum once you are in the market.
From Planning to Action
Exit strategy planning works best when you start early and treat it as a value-building program rather than a transactional task. Benchmarks keep the work grounded, but the payoff is simple. Fewer surprises in diligence and more leverage when buyers start pushing on price and terms.
If you are within a three to five-year window, pair a valuation with an evaluation so you know what to defend and what to improve. Then bring in an M&A advisor before an offer hits your inbox and sets the tempo.
If you are building toward a 2026 transaction, SHG can help connect forecasting, valuation, and deal prep so your numbers and your story stay aligned from kickoff through close.
Contact us to discuss a valuation, evaluation, and a plan that fits your goals.
