Exit planning FAQ
Straight answers to the questions owners ask about exits, succession and what a business is worth.
When should I start planning my exit?
Three to five years before you want out. Most of what raises a company’s value, such as cleaner financials, a management team that runs without you, and recurring revenue, takes that long to show up in the numbers a buyer will trust. Starting later usually means accepting a lower price or a longer earn-out.
What is my business actually worth?
What a buyer will pay for the cash flow it produces without you. For most small and mid-sized companies that is a multiple of seller’s discretionary earnings or EBITDA, adjusted for how dependent the business is on the owner, how concentrated the customers are, and how clean the books are. A valuation gives you the number; the book shows how to move it.
What are the three ways a business ends?
It closes, it sells, or it is passed on to family or a team. Every company arrives at one of these. The only question is whether the owner chose it in advance or let time, health or circumstance choose for them.
What does “owner-optional” mean?
A business that runs, grows and makes money whether or not the owner shows up. Owner-optional companies are worth more, sell faster, and give the owner the freedom to step back on their own schedule. Owner-dependent companies are hard to sell at any price.
My kids don’t want the business. What now?
That is a decision point, not a failure. It usually means a sale to a key employee, a competitor or a financial buyer, planned early enough to maximize value and protect your income. Many owners find a well-planned sale gives the family more than a reluctant succession would have.
What happens to my income after I sell?
It changes shape. A business that pays you a salary plus distributions becomes a lump sum, often with part of it paid over time through seller financing or an earn-out. Run the after-tax, after-reinvestment math before you go to market so the sale price you need is grounded in the life you want afterward.
How do business partners plan an exit together?
With a buy-sell agreement written before either partner wants out, a valuation method both accept, and a funding plan for the buyout. Partners rarely want the same ending at the same time; the agreement is what keeps a disagreement from becoming a forced sale.
Do I need a broker, a coach, or both?
A coach for the years before the sale, to build value and make the company owner-optional. A broker when you are ready to go to market, to price, package and negotiate. Vision Fox does both so the plan and the sale are run by the same people.