Here’s how to prepare your private company for an optimal exit

Deciding to sell your business is never just a financial decision. For many owners, it represents decades of sacrifice, risk, and identity. Once you’ve wrestled with the emotional side of stepping away and reached the point where you’re ready, the focus has to turn to preparation. How you prepare will directly determine how buyers view your company, what they are willing to pay, and how much you ultimately take home after taxes.

Keep growing, don’t coast -A common mistake owners make once they decide to sell is easing up on growth. Buyers can spot a business that has gone into “maintenance mode”. When that happens, valuations suffer. You need to show that the company still has momentum and is moving forward. Keep pushing sales, close contracts, and build out new products or services. Buyers pay for both the track record and the trajectory. Walk into a sale process with record revenues and profits, and you’ll command stronger offers. Sell from a position of strength and confidence in future.

Scrutinize costs and improve margins -Driving growth is important, but it's also important to demonstrate a disciplined handle on expenses. Buyers pay attention not just to the top line, but to the efficiency of the bottom line. Now is the time to dig deep:

• Review your marketing department or external marketing firm’s output. Are the dollars translating into real customer growth? If not, adjust or renegotiate.
• Shop your insurance and benefits programs. Even modest reductions increase profitability.
• Tighten vendor contracts and revisit supplier pricing. Revisit payment terms with both customers and suppliers. The more effectively working capital is managed, the less operating cash the company requires—and that’s capital that doesn’t need to be spent.
• Look for recurring expenses that may have crept in over the years and cut what no longer adds value.

You don’t want to slash blindly, but showing buyers that your business is run with cost discipline and strong working capital management signals sound leadership. It directly translates into higher profitability and less cash drag.

Work on the business, not just in it -One of the biggest questions buyers have is, “Can this company thrive without the owner?” The more your business depends on you personally, the higher the perceived risk, and the lower the valuation. This is where working on the business becomes critical:

• Delegate tasks and responsibilities whenever possible. Give clear authority to your management team and empower them to make decisions.
• Document processes and workflows so operations can continue without constant owner input.
• Step back from day-to-day work and focus on strategic planning, growth initiatives, and system improvements.

Look at your business through the buyer’s lens. What kind of company would you want to acquire? A business with a clear structure, strong leadership, and minimal dependency on one person will attract stronger offers. Minimizing buyer risk increases confidence and, ultimately, the price you can command.

Invest in clean and credible financials -Buyers don’t buy stories, they buy facts-based performance. Your company’s financial statements need to be accurate, consistent, and defensible. If you’ve been running personal expenses through the business, phase that out. If your compensation has been set artificially low or high, normalize it. Work with your CPA to adjust results so they fairly reflect the economics of the business. Beyond cleanup, I strongly recommend investing in a sell-side Quality of Earnings (QofE) report. Having one prepared by a reputable CPA firm not only uncovers issues before a buyer does, it also makes your financials more credible, speeds up diligence, and gives buyers confidence. It’s an investment.

Document processes and systems -Businesses that depend entirely on the owner make buyers nervous. They want to see that the company runs on systems and processes, not just your instincts. Take time to document how things are done: pricing, onboarding customers, scheduling, quality control, month-end close, and customer service. The more transferable your business is, the more attractive it is to buyers.

Strengthen the team around you -Buyers want to know who runs the business if you step away. Identify your right-hand person and formalize their role. Give them authority and compensation to show buyers there’s depth. Consider retention plans (stay bonuses or partial equity rollovers to ensure continuity). Companies with strong second-level management command premiums.

Assemble the right transaction team -This is also the right time to interview and assemble a strong team of advisors.

• An investment banker to market the business, create competition among buyers, and guide you through the process.
• An M&A attorney with deal experience to negotiate terms and protect your interests.
• A CPA firm to perform the sell-side Quality of Earnings analysis.
• A wealth manager, if you don’t already have one. You’ll need a plan for what to do with the net after-tax proceeds and clarity on whether there’s a gap between what the market-based valuation says and what you will need post-closing to live the life you want.

Tidy up legal and structural issues -Any loose ends can slow down or derail a transaction. If your entity structure has changed over time, make sure your records are current. If you have property or equipment owned personally but used by the business, put proper leases in place. A clean legal and structural picture makes diligence smoother and increases buyer confidence.

Highlight growth potential -Your company’s historical performance matters for valuation purposes. However, buyers would be acquiring your business to make even more money in the future. Show them what’s ahead: new markets, upcoming customer contracts, service lines that are scaling. Package your story so buyers can see both stability and upside.

Define your own role after the sale -Not every buyer expects the owner to walk away the day after closing. Many prefer some continuity, even if just for a transition period. Decide in advance what role you want. That clarity helps set buyer expectations and prevents you from ending up in a role you no longer want.

The decision to sell is a milestone. Once you’re personally ready, the way you prepare determines whether you leave some money on the table or walk away knowing you maximized the value of your life’s work. Keep growing the business, scrutinize costs and working capital, invest in a sell-side Quality of Earnings, put systems and people in place, work on the business rather than just in it, assemble a top transaction team, and clear up any legal issues. Do these things, and you’ll not only attract more buyers but also command a stronger price and leave the legacy you want.