Many business owners believe selling a business begins when they hire an advisor or start speaking with potential buyers. In practice, the outcome of a business sale is often determined years before a transaction process formally begins.

After working with owners across a wide range of transactions, one pattern is consistent. Businesses that experience valuation adjustments, unexpected deal structures, or buyer pushback during diligence are rarely facing new issues. More often, they are confronting risks that were always present but identified too late.

Preparing to sell a business should be viewed as a long-term process, not a single event.

Why Early Exit Planning Matters More Than Market Timing

When owners think about an exit strategy for business owners, market timing often gets the most attention. In reality, most business owners do not sell because the market is perfect. They sell based on personal timing — health, family considerations, burnout, opportunity, or a desire for change.

While timing matters, preparation has a far greater impact on valuation, deal certainty, and overall transaction outcomes than attempting to time a peak cycle.

Buyers evaluate more than revenue growth. They assess margin sustainability, risk transfer, owner dependence, financial reporting quality, and how easily the business can operate after the owner exits. When these factors are addressed early, owners retain leverage. When they are not, buyers respond by adjusting price, structure, or both.

Early business exit planning ensures that when personal timing drives the decision, the business is ready — regardless of where the market sits.

How Buyers Evaluate a Business Differently Than Owners

A common misconception during business exit planning is that owners assume buyers will value the company the same way they do. In practice, buyers assess businesses through a fundamentally different lens.

They focus on questions such as:

How predictable and sustainable are earnings
How dependent is the business on the owner
How consistent and credible is the financial reporting
Where does risk sit after the transaction closes
What would need to change for the business to scale

Understanding these buyer considerations early allows owners to make strategic decisions that align with how buyers think, not just how the business has historically been operated.

Why EBITDA Scale Changes Buyer Behavior

Certain levels of profitability materially change the buyer universe and deal dynamics.

As businesses grow and earnings become more predictable, the buyer universe expands and transaction certainty improves. At higher levels of normalized EBITDA, institutional and larger strategic buyers enter the market, often bringing increased competition and stronger valuation potential. At the same time, expectations around reporting discipline, management depth, and operational scalability rise significantly.

Reaching these levels alone is not enough. How the business achieves scale and how risk is managed along the way are equally important in supporting business valuation outcomes.

Preparing to Sell Is Not the Same as Selling

It is important to distinguish preparing to sell a business from a formal sale process.

A proper prepare-to-sell engagement is pre-transaction and advisory in nature. It is completed on the owner’s timeline and does not require a commitment to sell. Many owners pursue this work simply to reduce personal risk, improve decision-making, or preserve optionality.

If a sale ultimately occurs, the business is better positioned. If it does not, the owner still benefits from a stronger, more resilient company.

What Business Owners Gain From Preparing Early

Owners who invest in early business exit planning typically experience fewer surprises during due diligence, stronger negotiating leverage, and better deal structures, not just higher headline prices. They also gain greater clarity around risk exposure, operational readiness, and M&A readiness well before a transaction begins.

In many cases, early preparation improves day-to-day operations and reduces reliance on the owner, which can significantly improve quality of life even if a sale does not occur for several years.

Early Preparation Leads to Better Exit Outcomes

The strongest exits are rarely rushed. They are prepared.

Because most owners sell based on personal timing rather than perfectly timed market cycles, preparation protects value when the decision to transition arrives. For owners who expect a transition in the next two to five years, even if timing remains uncertain, preparation should begin early.

Doing the work ahead of time puts owners in control and ensures the business is positioned to achieve its full potential when the opportunity arises.

Jim Friesen, MBA, CPA, CM&AA
Founder