Exiting a business you’ve built is one of the most significant financial and emotional decisions you’ll ever make. For companies in the $10M to $250M revenue range, the difference between a mediocre exit and an exceptional one often comes down to preparation, timing, and understanding what buyers actually value.

Most business owners wait too long to start planning their exit. They assume they’ll “figure it out when the time comes,” only to discover that maximizing enterprise value requires 3-5 years of strategic preparation. Others move too quickly, leaving millions on the table because they didn’t understand how buyers calculate valuations or what triggers premium multiples.

Over the past decade helping owners prepare for and execute successful exits, I’ve identified 25 questions that consistently arise during the process. These range from fundamental timing questions to technical valuation issues to the emotional challenges of letting go.

Below you’ll find direct, actionable answers based on real transactions, documented outcomes, and patterns across industries. Whether you’re exploring the idea of an exit, actively preparing for sale, or negotiating with potential buyers, these answers will help you navigate the process more strategically.

When should I start planning my business exit?

Begin exit planning 3-5 years before your intended sale date. This timeline allows you to implement value-building initiatives like improving recurring revenue, documenting systems, strengthening management teams, and optimizing financial statements. Companies in the $10M-$250M range typically need 18-24 months minimum to achieve premium valuations. Starting earlier gives you negotiating leverage—you’re not forced to sell during market downturns or personal emergencies. Exit planning isn’t just about the transaction; it’s about building a more valuable, saleable asset.

How do buyers calculate the value of my company?

Buyers calculate value using a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), with multiples ranging from 3x to 10x+ depending on industry, growth rate, customer concentration, and scalability. A $10M EBITDA company at a 5x multiple sells for $50M. Strategic buyers often pay higher multiples than financial buyers because they can realize synergies. Recurring revenue, diversified customer base, documented systems, and strong management teams command premium multiples. Adjust EBITDA for owner compensation, one-time expenses, and non-business assets before valuation discussions.

What increases enterprise value most effectively?

The highest-impact value drivers are predictable recurring revenue (subscriptions, contracts, retainers), customer diversification where no single customer exceeds 10% of revenue, documented systems that operate without owner involvement, and consistent year-over-year growth of 15%+. A company with 70% recurring revenue typically commands 2-3x higher multiples than one with transactional sales. Strategic improvements in these four areas over 24-36 months can increase enterprise value by 30-100%. Focus on what buyers pay premiums for, not what you think adds value.

Should I use a business broker or investment banker?

Use business brokers for companies valued under $5M and investment bankers for companies above $10M. Brokers typically charge 10-12% commission and have local buyer networks. Investment bankers charge 3-8% with minimum fees of $50K-$250K but access institutional buyers, private equity firms, and strategic acquirers nationally. For $10M-$50M companies, a boutique M&A advisor specializing in your industry provides the best balance of expertise and cost. The right advisor creates competitive tension among buyers, increasing final price by 20-40% beyond their fees.

How long does the exit process typically take?

From engaging an advisor to closing typically requires 9-18 months. The process includes 2-3 months preparing materials and identifying buyers, 2-4 months marketing to potential acquirers, 1-2 months negotiating letters of intent, and 3-6 months in due diligence and closing. Rushed processes rarely optimize value—buyers sense desperation and reduce offers. Plan for 12 months as the baseline. Factors that extend timelines include complex financial histories, regulatory approvals, multiple stakeholders, and earnout negotiations. Never announce your intention to sell publicly until you have a signed letter of intent.

What’s the difference between asset sale and stock sale?

In an asset sale, the buyer purchases specific assets and assumes specific liabilities, leaving the seller’s corporation intact with remaining liabilities. Buyers prefer asset sales for tax benefits and liability protection. In a stock sale, the buyer purchases ownership shares, acquiring all assets and liabilities. Sellers prefer stock sales for capital gains treatment and simplicity. C-corporations face double taxation in asset sales (corporate and personal), making stock sales more tax-efficient. S-corporations and LLCs have similar tax treatment either way. This structure is negotiable and significantly impacts net proceeds—consult tax advisors early.

How do I prepare my financials for due diligence?

Prepare by having 3-5 years of audited or reviewed financial statements, detailed Quality of Earnings (QoE) analysis identifying add-backs and adjustments, documented revenue recognition policies, clean balance sheets with reconciled accounts, and separation of personal and business expenses. Buyers will scrutinize every revenue stream and cost center. Common issues that delay or kill deals: inconsistent accounting methods, undocumented revenue, commingled personal expenses, and unexplained EBITDA fluctuations. Invest $20K-$50K in pre-sale financial cleanup—it typically returns 5-10x in valuation and deal certainty.

Should I tell employees I’m selling the business?

Tell key management early (6-12 months before sale) because buyers require management interviews and retention is critical to valuation. Tell general employees only after signing a letter of intent, typically 30-60 days before closing. Premature disclosure causes anxiety, talent flight, and reduced productivity. Require key employees to sign NDAs and consider retention bonuses or equity rollovers to keep them engaged. Buyers discount valuations by 15-30% if critical talent plans to leave post-sale. Balance transparency with business continuity—you’re still running a company during the sale process.

What’s an earnout and should I accept one?

An earnout is deferred payment based on the company achieving specific performance targets post-sale, typically 1-3 years. Buyers propose earnouts to bridge valuation gaps or reduce risk. Sellers should minimize earnouts because you’re betting on performance you no longer fully control. If required, negotiate earnouts as 20-30% maximum of total consideration, with clear objective metrics (revenue, EBITDA), and avoid subjective measures. Earnouts introduce conflicts between seller priorities (maximize earnout) and buyer priorities (integrate operations). Push for larger upfront cash and smaller earnouts whenever possible.

How do I handle customer concentration before selling?

Reduce customer concentration by diversifying revenue so no single customer exceeds 10% of total revenue, ideally 5%. If you have concentration now, sign longer-term contracts with key customers, document relationship strength and switching costs, introduce backup account managers, and demonstrate active new customer acquisition. A company with one customer at 40% of revenue might sell at 3-4x EBITDA, while the same company with diversified revenue sells at 6-7x. Starting 24-36 months before sale, implement systematic strategies to add customers in the tier below your largest accounts.

What due diligence will buyers conduct?

Expect comprehensive review across six areas: financial (3-5 years statements, tax returns, QoE analysis), legal (contracts, litigation, IP, compliance), operational (systems, processes, key dependencies), commercial (customer contracts, pipeline, retention), human resources (employment agreements, benefit plans, pending claims), and tax (returns, audits, structuring). Buyers will interview customers, employees, and suppliers. The process takes 60-120 days and requires 100-300 hours of management time. Proactively identify and resolve issues before buyers discover them. Problems found during diligence reduce offers or kill deals; problems disclosed upfront are just negotiating points.

How do I value intangible assets like brand and relationships?

Intangible assets are valued within the overall EBITDA multiple rather than separately. Strong brands, customer relationships, proprietary processes, and intellectual property justify higher multiples. A company with 80% revenue from repeat customers and strong Net Promoter Scores commands premium multiples because buyer risk is lower. Document intangibles through customer satisfaction data, brand awareness metrics, contract renewal rates, and proprietary systems. Buyers pay more for defensible competitive advantages. If relationships depend entirely on you personally, value decreases—transfer key relationships to team members 12-24 months before sale.

What role will I have after the sale?

Expect 3-24 month transition periods where you remain involved, typically 5-20 hours per week initially, tapering to consultation-only. Your role includes customer relationship transfers, employee stability, system knowledge transfer, and ongoing deal resolution. Financial buyers often want longer involvement to de-risk the acquisition. Strategic buyers with industry expertise may want shorter transitions. Negotiate transition terms explicitly: title, compensation, responsibilities, and exit timeline. Many sellers underestimate the emotional difficulty of reduced authority post-sale. Clear role definition prevents conflicts during the transition period.

How do I find the right buyer for my business?

The right buyer offers fair valuation, cultural fit with your team, strategic vision aligned with your legacy, and high likelihood of closing. Work with M&A advisors to identify buyer categories: strategic acquirers (competitors, suppliers, customers), financial buyers (private equity, search funds), and individual buyers. Run a competitive process with 5-15 qualified buyers receiving information simultaneously. The highest initial offer rarely yields the highest final price—evaluate buyers on certainty of close, cultural compatibility, and total consideration structure. Meeting potential buyers face-to-face reveals intentions better than paperwork alone.

What tax strategies minimize my exit tax burden?

Primary strategies include structuring as stock sale for capital gains treatment, utilizing Qualified Small Business Stock (QSBS) exclusions if eligible, establishing Charitable Remainder Trusts (CRTs) for partial proceeds, spreading payments across tax years to manage brackets, and utilizing 1031 exchanges if purchasing real estate. Estate planning strategies like Grantor Retained Annuity Trusts (GRATs) transfer wealth tax-efficiently. State residency matters—some states have no capital gains tax. Engage tax advisors 12-24 months before sale, not during negotiations. Tax structuring can save 15-30% of proceeds; post-sale planning recovers nothing. (always seek a qualified tax professaional for questions like this).

Should I stay on as CEO after selling?

Stay on only if you genuinely want to and the terms are clearly defined. Many sellers assume they’ll stay, discover they hate working for someone else, and leave within 12 months, triggering earnout losses or conflicts. If staying, negotiate employment terms explicitly: salary, bonus, authority, decision rights, reporting structure, and exit conditions. Private equity buyers typically replace CEOs within 18-36 months regardless of performance. If your identity is tied to being the owner, transitioning to employee is psychologically difficult. Consider advisory roles instead of operational positions if you want influence without daily responsibility.

How do I handle non-compete agreements?

Expect non-compete agreements lasting 2-5 years, covering your geographic market and industry. Buyers require these to protect their investment from you immediately competing. Negotiate scope narrowly—restrict specific business activities, not entire industries. Broader geographies and longer durations should command higher purchase prices. Non-competes must be reasonable to be enforceable—courts void overly broad agreements. If you plan post-sale ventures, carve out specific permitted activities explicitly. Never sign open-ended restrictions. Non-competes typically include non-solicitation of customers and employees. Consult attorneys before signing—violations trigger lawsuits and clawbacks.

What’s a Quality of Earnings report and do I need one?

A Quality of Earnings (QoE) report is an independent analysis of your financial statements identifying adjustments, risks, and EBITDA sustainability. Buyers commission QoE reports during diligence, finding issues that reduce their offers. Smart sellers commission seller QoE reports 6-12 months before going to market, addressing problems proactively. QoE reports cost $15K-$75K depending on complexity but prevent surprise deductions during negotiations. They identify add-backs (owner salary, one-time expenses, non-operating assets) that increase EBITDA. A clean QoE report accelerates diligence and increases buyer confidence, often improving final valuation by 5-15%.

How do I explain declining revenue or profitability to buyers?

Address decline proactively by providing context: market conditions, strategic investments, temporary disruptions, or planned transitions. Buyers discount declining businesses by 30-50% or walk away entirely. If decline is temporary, demonstrate the turnaround with recent monthly data showing recovery. If strategic (e.g., you reduced low-margin revenue intentionally), show improved profitability trends. Never hide decline—buyers discover everything during diligence. Instead, control the narrative by explaining causes, actions taken, and forward projections. Consider delaying sale 6-12 months if you can reverse negative trends, as stabilized or growing revenue commands significantly higher multiples.

What percentage of deals actually close after LOI?

Approximately 50-60% of deals with signed Letters of Intent (LOI) close successfully. Common reasons deals fail include buyer financing issues, due diligence discoveries, seller’s remorse, material adverse changes in business performance, and valuation disagreements. Maximize closing probability by choosing experienced buyers with committed financing, maintaining business performance during diligence, disclosing issues proactively, and negotiating reasonable LOI terms. Exclusivity periods in LOIs (typically 60-90 days) prevent you from talking to other buyers, so only sign with serious, qualified parties. Expect 20-30% purchase price renegotiation during diligence—build this into initial expectations.

How do I maintain business performance during the sale process?

Maintain performance by keeping the sale confidential from most employees, delegating diligence work to advisors and key managers, blocking specific times for sale activities rather than constant interruptions, and continuing normal operations and growth initiatives. Buyers reduce offers if revenue or profitability decline during diligence—they assume problems are emerging. The sale process consumes 10-20 hours weekly of owner time, more during intensive diligence. Companies that treat the sale as the priority and neglect operations often see performance dips that kill deals. Run the business as if the sale might not happen, because 40-50% of attempted sales fail.

What’s the difference between strategic and financial buyers?

Strategic buyers are companies in your industry or adjacent markets seeking synergies, growth, or competitive advantage. They often pay higher multiples (6-10x+) because your revenue adds to their platform and they can eliminate redundancies. Financial buyers are private equity firms, family offices, or search funds seeking return on investment. They typically pay lower multiples (4-7x) but offer faster processes and cleaner terms. Strategic buyers conduct longer diligence and have higher integration risk. Financial buyers often require management to stay and grow the business. Choose based on your priorities: maximum price (strategic) or certainty and speed (financial).

How do I protect my employees during a sale?

Protect employees by negotiating buyer commitments on retention, compensation, and benefits for 12-24 months post-close. Include key employee retention bonuses funded by escrow or buyer. Introduce employees to buyers early so they’re comfortable with new ownership. Communicate transparently once LOI is signed, addressing concerns directly. Remember that buyers often make promises pre-close they don’t keep post-close—get critical commitments in writing. Some sellers negotiate employment protections as deal terms. You can’t control everything post-sale, but you can influence initial treatment. Your reputation depends partly on how employees fare after you exit.

Should I clean up operations before selling or sell as-is?

Clean up operations 12-24 months before going to market. Buyers pay premiums for clean, scalable businesses and discount messy ones by 20-40%. Focus on financial cleanup (separate personal expenses, reconcile accounts, document revenue), operational documentation (process manuals, org charts, key metrics), legal cleanup (resolve litigation, update contracts, secure IP), and customer diversification. “As-is” sales attract bottom-feeders offering low multiples and difficult terms. Investment in cleanup—typically $50K-$150K in advisor fees—returns 5-10x in higher valuation and faster sales. Think of it as staging a house for sale: presentation affects price significantly.

What happens if the deal falls through?

If deals collapse, regroup by analyzing what went wrong (financing, diligence issues, valuation gap, buyer problems), addressing identified problems before re-marketing, waiting 6-12 months if business performance caused the failure, and considering different buyer types or deal structures. Failed deals damage morale if employees knew about the process and relationships if customers learned of the sale. Confidentiality protects you if deals fail. Some owners successfully return to market within 3-6 months with new buyers; others need longer to repair issues or improve performance. Failed deals are emotionally exhausting—take time to recover before trying again. Learn from the experience to improve the next process.

How do I know if I’m emotionally ready to sell?

You’re emotionally ready when you have a clear vision for post-sale life, you’re excited about what comes next (not just tired of current work), you can separate your identity from business ownership, and you’re prepared for the grief that often follows even successful exits. Many owners underestimate emotional attachment and experience seller’s remorse even with great deals. Work with advisors, therapists, or coaches to process emotions before and during the sale. If you’re ambivalent, buyers sense it and reduce offers or walk away. Some owners need transition plans involving gradual reduction of responsibilities. There’s no shame in deciding you’re not ready—better to wait than to sell and regret it.

Planning Your Exit Strategy

Most business owners spend decades building their companies but only months planning their exits—then wonder why they leave millions on the table or struggle with the transition. The information above represents years of patterns, successful transactions, and expensive lessons learned from owners who wished they’d prepared differently.

If there’s one principle to take from these 25 answers, it’s this: exit planning is not something you do when you’re ready to sell. It’s what you do to build a more valuable, saleable business whether you exit in three years or thirty years. The strategies that maximize enterprise value—recurring revenue, customer diversification, documented systems, strong management—also make your business more profitable and easier to run today.

Start with honest assessment. Which of these questions revealed gaps in your current readiness? Where are you most vulnerable if a buyer appeared tomorrow? If customer concentration exceeds 20%, if your financials aren’t audit-ready, if systems depend entirely on you, or if you haven’t thought about life after exit, you have work to do before going to market.

For companies in the $10M-$250M range, the difference between average and exceptional exits often comes down to 3-5 years of strategic preparation. Owners who plan early negotiate from strength. Those who wait scramble from weakness. The best time to prepare your exit was three years ago. The second-best time is today.

Your legacy depends not just on what you built, but on how you transition it. These questions are your starting point, not your finish line. The real value emerges when you apply these frameworks specifically to your business, your market, and your personal goals—and then execute consistently over time.