Why a Structured Exit Timeline Matters
According to the Exit Planning Institute, only 20-30% of businesses that go to market actually sell. The primary reason? Lack of preparation. Businesses that follow a structured exit timeline sell for 20-50% more and close 40% faster than those that wing it.
The BizBuySell Insight Report found that the median time from listing to closing is 200 days for prepared businesses and 300+ days for unprepared ones. Many unprepared businesses never close at all because issues discovered in due diligence kill the deal.
"Every business owner I work with in Metro Detroit says they wish they'd started this process a year earlier. The checklist isn't complicated. It's just that most owners don't know what they don't know until they're already in the thick of a deal."
-- Matt Sitek, FuturePath Ventures
Months 12-10: Foundation & Assessment
Get a preliminary business valuation
Use our free valuation tool for a quick estimate, then consider a formal appraisal. Start here
Assemble your advisory team
CPA, M&A attorney, business broker or exit advisor, wealth manager. Interview at least 2 of each.
Take the Exit Identity Assessment
Clarify your goals: maximize price, preserve legacy, speed, employee protection. Start here
Clean up 3 years of financial statements
Recast P&L to show true SDE/EBITDA. Document every add-back with supporting evidence.
Review entity structure with CPA
Assess whether your current structure (LLC, S-Corp, C-Corp) is optimal for the sale from a tax perspective.
Months 9-7: Strengthen & Document
Document all key processes and SOPs
A business that runs without you is worth 2-3x more than one that depends on you. Create operations manuals for every critical function.
Diversify customer concentration
If any single customer is >15% of revenue, actively diversify. Buyers heavily discount customer concentration risk.
Strengthen your management team
Delegate key responsibilities. Promote a COO or operations lead who can run daily operations.
Review and extend key contracts
Supplier agreements, leases, customer contracts. Buyers want to see 2+ years remaining on critical agreements.
Address deferred maintenance and liabilities
Fix lingering issues: equipment maintenance, pending legal matters, environmental compliance, employee disputes.
Months 6-4: Positioning & Preparation
Get a formal business valuation
Engage a Certified Valuation Analyst (CVA) for a defensible, current appraisal. Budget $3,000-$15,000 depending on complexity.
Prepare the Confidential Information Memorandum (CIM)
Your broker or advisor will create this 20-40 page document that presents your business to potential buyers.
Develop your ideal buyer profile
Strategic buyer, financial buyer, PE group, competitor, employee group? Each type values different things.
Address intellectual property and legal protections
Ensure trademarks, patents, non-competes, and trade secrets are properly documented and protected.
Set up a data room
Organize all due diligence documents digitally: financials, contracts, employee records, insurance, tax returns.
Months 3-1: Go to Market & Close
Launch the confidential marketing process
Your broker presents to qualified, NDA-signed buyers. Expect 20-50 initial approaches, 5-10 serious inquiries, 2-3 LOIs.
Evaluate Letters of Intent (LOIs)
Don't just compare price. Evaluate deal structure, contingencies, due diligence timeline, and transition requirements.
Support buyer due diligence
Respond promptly and completely. Delays and incomplete answers kill deals. Assign a point person to manage the process.
Negotiate final purchase agreement
Work with your M&A attorney on representations, warranties, indemnification, and post-closing obligations.
Plan the transition and announcement
Prepare employee, customer, and supplier communications. Many deals include a 3-12 month transition period.
Common Mistakes That Derail Exit Timelines
Waiting too long to clean financials
Adds 3-6 months to timeline. Buyers walk if books are messy.
Not having a #2 person
Reduces value by 20-40%. Buyers see single-point-of-failure risk.
Customer concentration above 20%
Buyers demand 10-25% price reduction or earnout structures.
Telling employees too early
Key people start looking for other jobs. Morale drops.
Overpricing based on emotion
Business sits on market, goes stale. Eventually sells for less than realistic initial ask.
Ignoring tax planning
Can cost 5-15% of sale proceeds in unnecessary taxes. See our tax guide.
Start Your Exit Timeline Today
Step 1 is knowing your business value. Get a free estimate in minutes, or schedule a consultation to walk through this checklist with an advisor who knows the Metro Detroit market.
Exit Planning Checklist FAQ
How far in advance should I start planning my business exit?+
Ideally 3-5 years in advance for maximum value and minimum stress. At minimum, 12 months before you want to close. The 12-month timeline on this page represents the 'minimum viable exit plan.' Adding an extra 1-2 years of preparation typically increases sale price by 20-50% because you have time to strengthen financials, reduce owner dependency, and build recurring revenue.
What is the single most important thing on this checklist?+
Getting your financial records clean and owner-adjusted. More deals fall apart during due diligence over messy financials than for any other reason. Buyers and lenders need to see 3 years of clean P&L statements with clear SDE or EBITDA calculations, a normalized balance sheet, and documented add-backs. If you only do one thing, do this.
Do I need all of these items to sell my business?+
No, this is the comprehensive ideal. Many businesses sell successfully with a subset of these items. However, each item you skip typically costs you either sale price (5-15% per major gap), closing certainty (incomplete items cause re-trading during due diligence), or time (missing items extend the timeline by weeks or months). The more prepared you are, the stronger your negotiating position.
Can I do this myself or do I need professional help?+
You can do many items yourself (organizing records, documenting processes, strengthening customer relationships), but certain items require professional expertise: the business valuation (use a Certified Valuation Analyst), deal structuring and tax optimization (CPA), legal agreements (M&A attorney), and buyer sourcing (business broker or M&A advisor). Budget $30,000-$75,000 in professional fees for a business selling between $1M-$5M.
Ready to Take the Next Step?
Find out how ready you are or talk to an advisor about your options.