Thinking of Selling Your Business in 3–5 Years? Read This

They say things come in threes - and apparently, so do business owners thinking about selling. I’ve had three entrepreneurs talk to me about this in the last month alone.  

And every time, it makes me wince just a little bit. Why?  

Unfortunately, I’ve seen way too many entrepreneurs pour decades into a business and walk away with less $$ than they deserved - not because they weren’t smart or they didn't have a great business, but because they waited too long to start planning for their exit.

Obviously these aren’t just random people:

-They’re business owners who’ve worked their butts off.

-They’ve built something from nothing.

-They’ve carried the stress of haphazard growth, the heaviness of payroll during slow times, and (eventually) the sleepless nights wondering how they’ll keep up with so many clients.

And I know that when someone says “I want to sell,”  what they’re really saying is: “I want to leave my business on a high note and be paid properly for decades of my blood, sweat and tears”.

So if you’re thinking of cashing out in the next 3 to 5 years, listen up friend because I’m putting on my big sister hat for a minute 🙂  

Let’s talk about three things I need you to start doing if you want to get top dollar for the sale of shares of your business. 

1. Maximize your EBITDA

People often ask me “How do you value your business?”  Well, buyers value your business as your earnings x an industry multiple.  For example, if your earnings are $800k per year and the multiple for businesses similar to yours is 3, the shares of your corporation could be worth roughly $2.4M. 

**Key Detail: we’re not talking “normal net earnings”.  We’re talking something called EBITDA which is net income before interest, taxes, depreciation, and amortization.** 

And the higher your EBITDA, the higher the price you can command - especially if how you generate this income is repeatable and growing.

What to do to now:

• Trim the “nice to haves”

  • aka unnecessary expenses or personal perks that don’t contribute to profit

  • sorry, but this is when you should really start listening to your bookkeeper and stop expensing your weekly blowout… or maybe take a closer look at whether that $13k team retreat is really necessary right now

• Increase your margins (hi!!! this is where I come in!)

• Show at least 3 years of stable or increasing EBITDA, if possible

2. Make the business less about you

If you’re still the “everything person,” you’ve built a job - not a saleable asset. Buyers want businesses that run without the founder. 

But if you’re still the face of your business, don’t fret: that’s why we’re getting you ready early so that you have time to make some big changes if your business is currently allllll about you.

What to do now:

• Document your role as CEO - role profile, function, responsibilities, collaborators, meeting cadence etc.  Work to delegate duties (where appropriate) to your team.  Basically, stop doing everything yourself… *especially* PR, client relationship mgt, and sales.

• Develop systems and SOPs for repeatable workflows.  And while you’re at it, you should probably tighten up your ops in other areas - billing/AR, tech stack, project delivery process, clarify staff roles/responsibilities, employment agreements, org charts, you know the drill.. (also, where I come in!!)

And if there isn’t really a way for you to transition stuff to team members or remove yourself from sales / client acquisition, the terms of your buy/sell agreement will probably require you to work for the new owner for a period of time, post-sale.  This can mean an earn-out or transition period which might be tied to client retention or other key performance metrics. 

Unfortunately, this can lower your sale price and increase your risk of not getting paid out fully.  But…. accepting these kinds of terms can sometimes be the difference between deal or no deal.

3. Structure the deal to maximize your after-tax proceeds

There’s more than one way to sell your business - and the tax / cash-flow side of it really, really matters. This is where great business owners lose hundreds of thousands of $$ - not because of their business’ performance, but because of the deal structure.

To maximize what ends up in your pocket:

• Talk to your tax advisor and early. The difference in after-tax cash proceeds from a share sale versus an asset sale can be huge - and if you plan ahead for a share sale, you may qualify for something called the Lifetime Capital Gains Exemption (approx $1M tax-free per shareholder in 2025). BUT you need to meet certain criteria up to 24 months before the sale. Don’t leave this to the last six months.

• Understand deal terms: upfront cash vs. earn-outs, holdbacks, or vendor financing. There’s more than one way to get paid - and they all come with trade-offs.

And if you’re reading this now and going….

“Huh… I thought I had lots of time.. but selling my business in 3 years is starting to feel a heck of a lot more complicated..”

I see you.

You’re exactly who I love to help.

I'm not the consultant who hands you a big report and disappears.

I roll up my sleeves and fix what’s in the way of you getting paid what you deserve for all your years of hard work.

I help you:

• Improve your margins to max out your business' valuation (that’s the EBITDA part)

• Restructure your business so that it runs without you (so buyers see it as a saleable asset) and

• Coordinate the structure of your sale so more money actually ends up in your pocket.

So, if you want to be ready - like really ready - to sell in the next few years, we should talk.

Book a call this week -  and let’s make sure you walk away with the price you deserve.