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Planning Your Exit Timeline Starting with Ideal Sale Date

If you’re a business owner, you likely agree on one essential principle: Every goal needs a deadline.

 

Deadlines are the driving force that transforms goals and strategies into actionable plans. They foster:

 

  • Accountability
  • A sense of urgency
  • Clear measurement
  • Focus and prioritization
  • Commitment

 

Preparing for your exit follows the same principle. Achieving a successful exit outcome demands a solid plan, and a solid plan relies on setting deadlines for each key milestone. Our recommendation: design an exit timeline by beginning with the end goal and start by defining your ideal exit date.

 

Your preferred exit date is essentially the timeline you envision for selling your business. This could align with a personal milestone, like retirement, or signify the right moment to transition into a new opportunity.

 

More than anything, it highlights how you prioritize the value of your time and the potential costs of waiting too long to make a move.

Business owners with a clear target exit date and a well-defined plan tend to:

 

  • Be mentally ready for the sales process
  • Show a strong sense of commitment, enhancing their credibility
  • Use their timeline to ensure all stakeholders stay focused and aligned

 

Many business owners we consult with tend to skip this essential first step—they haven’t fully considered their ideal exit date. What would it mean to delay retirement by 6 months or even 3 years? What are the costs of prolonging the sale process?

 

Even if you’re just exploring a potential exit to assess if you can achieve your target price, setting a firm date for making a decision can help avoid an overly drawn-out evaluation process.

Case Study

We accompanied a business owner to pinpoint their ideal exit date. They aimed to sell one of their divisions to reinvest in another area of the business.

 

Through this process, we uncovered a few key insights the owner hadn’t fully considered:

 

  • The division they planned to sell was incurring a monthly loss of 8K€
  • They projected that reinvesting the sale proceeds into the new division could yield 3.5M€ over five years, or about 58K€ per month
  • Therefore, each month’s delay in the sale represented an opportunity cost of roughly 66K€

 

While the numbers weren’t exact, they provided a clear direction. Recognizing their opportunity cost helped the owner solidify their ideal exit date. With this date in mind, they could better appreciate the balance between speed and price, leading them to develop a strong exit timeline and engage us to optimize both.

 

The takeaway: identifying your ideal buyer and valuation is only part of the equation. These must align with a clear exit date. Focusing on this date can greatly enhance both your process and your mindset.

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Based on our database and our client’s projects, we suggest an average of 343 days to sell a business. This varies by industry and financial profile—see the breakdown below.

 

 

Market Date: refers to the moment you start engaging in conversations with potential buyers.

 

Outlined below are the essential milestones and events involved in the business sale process, with recommended timelines leading up to an optimal exit date. Each stage also includes an overview of its specific activities.

 

Business Exit Timeline

Begin Exit Planning ~ 1,000 Days Out

Key Steps

 

  • Preparation:  Have conversations with executives about the exit.
  • Optimize Operations: Improve financial performance, streamline operations, and reduce liabilities.
  • Plan Succession: Identify and prepare key management personnel.
Start M&A Search ~ 18 Months Out

Key Steps

 

  • Research Advisors: Look for advisors with experience in your industry and a track record of successful deals.
  • Evaluate Fit: Assess potential advisors for compatibility with your business values and goals.
Hire M&A Advisor ~ 15 Months Out

Key Steps

 

  • Conduct Interviews: Interview shortlisted advisors to understand their approach and strategy.
  • Negotiation Terms: Agree on fees, responsibilities, and expectations in a formal engagement letter.
Begin M&A Process ~ 12 Months Out

Key Steps

 

  • Prepare Financials: Ensure all financial statements are accurate, up-to-date, and audit-ready.
  • Create Materials: Develop a compelling teaser, information memorandum, and other marketing documents with your advisor.
  • Identify Buyers: Work with your advisor to create a list of potential investors.
Execute LOI ~ 6 Months Out

Key Steps

 

  • Review Terms: Carefully examine all terms and conditions outlined in each LOI you receive.
  • Negotiate Terms: Address any issues or concerns and negotiate terms that are favorable to your business.
Close The Deal ~ Ideal Exit Date

Key Steps

 

  • Due Diligence: Facilitate the buyer’s due diligence process by providing requested information promptly.
  • Finalize Agreements: Work with legal and M&A advisors to finalize purchase agreements and other necessary documentation.