Selling a Business: Plan Early

I recently sold a car locally through Craigslist—the ever-helpful online classified site that has changed the way consumers transact with one another. It was the easiest sale of a larger-priced item I have ever made. After a full clean and car detail, I posted several pictures and a complete write-up of the features of the car and posted it. Within fifteen minutes I received a phone call from someone stating he was hard-up for a vehicle and wanted to purchase something fast.

We met up two hours later and completed the requisite paperwork. It was the fastest all-cash deal. In the real world, such a deal would rarely, if ever, happen this quickly. In fact, it is a general rule that the larger the deal, the slower things generally go, especially if the acquirer is thorough with due diligence questions. Like software development, deals always tend to take about 25% longer than you anticipate and about 10x as long as you would typically like.

With that in mind, here is a pretty exhaustive list for the business divestment “early bird.”

• Succession Planning. Who will take over? How will they lead? What experience is necessary for them when the current owner is gone?
• Estate Planning. When it comes time to retire from a business many entrepreneurs have left a gap in estate planning. Without proper planning, huge tax, care and other financial burdens could be placed on the business’s successors. Plan early on this one by knowing what i’s should be dotted and t’s should be crossed.
• Tax Liability Consulting. Tax obligations represent a huge aspect of today’s M&A deals. Tax is also heavily intertwined with estate and succession planning. The largest liquidity event of any successful business owner will also be one of the largest taxable moments of your lifetime. Knowing how to successfully avoid the tax, where possible, will be perhaps the biggest boon.
• Finance Obligation and Opportunity Assessment. How will the sale be funded? If the intended acquirer already exists, is there an exit plan for financing the deal that is amicable for all parties involved?
• Deal Structure. Will the deal be cash, stock, debt, earn-out or—as most are—some combination of the three.
• Buy-out Provisions. Is there a buy-out provision that a potential owner could not fulfill? If not, perhaps life insurance contingencies could be purchased to ensure such an event would be mostly mitigated of the risk.

Many other aspects could prove impediments to getting the deal done quickly. Doing proper sell-side preparation well ahead of time will be extremely helpful. Because certain life insurance, tax and wealth transfer aspects of selling your business will need consideration years in advance of finally speaking with a consultant, it would be wise to begin talking early. Setting up the requisite considerations listed above represents something that will potentially take years to complete.

We advise toward starting early on preparing to sell a business. Starting even up to ten years before the intended sale can be extremely helpful. Doing so means you’ll be completely prepared if an offer comes along and the deal can be completed quickly. Doing deals is never easy, but knowing a few things about when to begin can save time and stress when it may be needed most.

Why Starting Early Changes the Outcome

The businesses that sell fastest—and for the highest valuations—are almost universally the ones that spent years making themselves buyer-ready before any formal process began. A buyer conducting due diligence wants clean financials, documented processes, stable management, and a business that does not revolve around the founder’s personal relationships. None of those attributes are created quickly. Cleaning up the books, transitioning key customer relationships, reducing owner dependency, and establishing recurring revenue streams are all multi-year undertakings when done properly.

Sequencing the Key Pre-Sale Workstreams

Treating the items above as a checklist is helpful, but sequencing matters. Tax and estate planning must generally come first, because certain structures—such as grantor retained annuity trusts, family limited partnerships, or QSBS exclusion planning—require years of lead time to be legally effective at the moment of sale. Succession planning typically runs in parallel: identifying and grooming an internal successor, or alternatively documenting that the business does not require one, both take time. Financial clean-up and normalization of earnings is the final layer, typically prioritized in the eighteen to twenty-four months immediately before launch.

For owners considering a sale to a private equity group or a strategic acquirer, requesting a preliminary sell-side advisory assessment two to three years ahead of a target exit date can identify the specific gaps a buyer will scrutinize. Addressing those gaps proactively, rather than reactively during a live deal process, gives sellers significantly more negotiating leverage. You may also want to review our article on strategies for boosting business value before selling and on timing considerations when selling your business for additional context on positioning.

The Cost of Starting Late

Owners who wait until they are emotionally ready to sell—often triggered by burnout, a health event, or an unsolicited approach from a buyer—frequently discover that their timeline and the buyer’s timeline are incompatible. A well-prepared buyer can complete diligence in sixty to ninety days; a seller who has not normalized add-backs, resolved deferred maintenance, or obtained audited financials may need six to twelve months just to get to a credible starting position. That delay can cost the seller the deal entirely, or force a price concession to compensate the buyer for the added risk. Starting the planning process early is the single highest-return investment most business owners can make. When you are ready to begin, prepare a transaction outline with an advisor to map your specific path to exit.

Frequently Asked Questions

How many years before a sale should a business owner start planning?

Most advisors recommend beginning the core planning work—estate planning, succession, and tax structuring—at least three to five years before a target sale date. Some elements, particularly certain trust structures or QSBS qualification periods, require even longer lead time. The earlier you start, the more options remain available.

What is the single most important thing a seller can do to maximize sale price?

Reducing owner dependency—ensuring the business can operate, retain customers, and generate revenue without the founder’s daily involvement—typically has the largest positive impact on valuation multiples. Buyers pay premium prices for businesses that do not require the seller to stay on indefinitely.

Should I tell employees I am planning to sell?

This is one of the most sensitive decisions in any exit process. Most advisors recommend a tight circle of confidentiality until a deal is substantially certain, then a carefully planned communication to key employees before closing. Early, broad disclosure can destabilize the workforce and undermine the business’s value at exactly the wrong moment.