Exiting a business is a pivotal moment for every founder. No matter the deal size, there are some basic principles you need to keep in mind to have a clean exit.
In a recent episode of Build a Business Worth Buying, I got to sit down with Aaron Alpeter, podcast host and founder/CEO of Izba Group to share invaluable insights I've gleaned from working on both sides of the table.
Watch the full episode:
Here are the top strategies we discussed to help you have a smooth exit that maximizes the value of your business.
1. Start Early. Way Earlier Than You Think
If you're thinking of selling in the next three years, it's actually best to start preparing today. While this timeline may seem long, legal, tax, and operational readiness take more time than people often thing. Early planning allows you to:
- Optimize tax structures (e.g., QSBS eligibility)
- Clean up contracts and employment agreements
- Build a data room with organized documentation
Pro Tip: Ask your legal team for a sample due diligence checklist now. Begin collecting and organizing documents as they come across your desk.
2. Legal Isn't Just for Emergencies—It's a Strategic Asset
Many founders view legal counsel as a last resort. At Michael Best, we are showing entrepreneurs that your legal team can be a proactive and strategic asset to your company. Your legal team can:
- Save millions through tax planning
- Reduce deal risk and indemnity exposure
- Improve buyer confidence and valuation
Pro Tip: Treat your legal team as your strategic partner. Involve them early to structure deals, clean up IP, and prepare for diligence.
3. Know What Can Derail a Deal...and Fix It Early
Growth is messy. Your M&A can't be. Common deal-breakers include:
- Missing IP assignments
- Poor employment classification
- Unassignable customer contracts
- Unclear asset ownership
Pro Tip: Review your top contracts and ensure they include assignment clauses. Clean up employment records and IP documentation.
4. Align Incentives in Earnouts
Earnouts can be tricky. Founders often lose control post-close, making it hard to hit performance targets.
Pro Tip: Structure earnouts around achievable, shared goals. Ensure both buyer and seller are incentivized to grow the business together.
5. Understand the Buyer's Perspective
Buyers assess risk. A well-run, organized business signals lower risk and higher value. Conversely, if your business is highly disorganized, it can lead to price reductions and longer negotiations.
Pro Tip: Present a clean, professional, and attractive offer for buyers. Have your financials, contracts, IP, and HR documentation ready and organized so the buyer can easily review.
6. Prepare Personally, Not Just Professionally
Your net worth may be tied up in your business. A successful exit requires personal financial planning:
- Trust and estate planning
- Tax strategy for proceeds
- Understanding deal structures (cash, earnouts, seller notes)
Pro Tip: Work with a CPA and financial adviser early to prepare for life after the exit.
7. Build a Business with a Moat
The best businesses aren't just profitable, they're defensible. The most effective moats come from delivering consistent value and building trust with all parties involved.
Pro Tip: Focus on being the best at what you do. Build a brand and customer experience that buyers see as irreplaceable.
Final Thoughts
A clean exit goes beyond the sale. By starting early, involving the right advisers, and preparing both your business and yourself, you can maximize your outcome and minimize stress. An authentic, well-run business is not a paradox—it's the secret.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
