Business Exit Planning Checklist: 12 Steps to a Successful Sale

The highest-value business exits don't happen by accident. They're planned — typically 2-3 years in advance. Owners who prepare methodically sell for more, close faster, and avoid the surprises that kill deals.

This is the exit planning checklist I walk through with every client.

Phase 1: Foundation (24-36 Months Before Sale)

1. Get a Baseline Valuation

You can't plan an exit if you don't know where you're starting. Get a professional valuation — not an online calculator estimate — that gives you a defensible range based on your financials, industry multiples, and market conditions.

This baseline tells you:

• What your business is worth today
• What it could be worth with targeted improvements
• Whether your exit number is realistic on your timeline

2. Set Your Target Number

Work backwards from what you need. Factor in:

• Taxes (federal capital gains + state — in California, expect 35-37% total)
• Broker fees (typically 5-12% depending on deal size)
• Outstanding business debt that must be paid at closing
• Your post-sale living expenses, investments, and goals

If you need $3M after taxes and fees, your business needs to sell for roughly $5M+ depending on deal structure. Knowing this number early lets you plan accordingly.

3. Assemble Your Advisory Team

You need:

• M&A advisor / business broker — to manage the sale process
• CPA / tax advisor — for tax planning and deal structure optimization
• M&A attorney — for purchase agreement negotiation and closing
• Wealth advisor — for post-sale investment and estate planning

Get these relationships in place early. You don't want to scramble for an attorney during due diligence.

4. Clean Up Your Financials

This is the single highest-ROI activity in exit planning:

• Separate all personal expenses from the business
• Standardize your accounting method (accrual preferred for larger businesses)
• Produce monthly financial statements (P&L, balance sheet, cash flow)
• Work with your CPA to prepare clean, defensible add-back schedules
• If your revenue is over $5M, consider getting financial statements reviewed or audited

Phase 2: Value Building (12-24 Months Before Sale)

5. Reduce Owner Dependence

If the business can't run without you, it's not sellable at a premium. Actions:

• Hire or promote a general manager / COO
• Document all key processes and SOPs
• Transfer client relationships to account managers
• Build a leadership team that can make decisions independently
• Take a 2-week vacation and see what breaks

6. Build Recurring Revenue

Recurring revenue is the single biggest multiple enhancer. Depending on your business:

• Introduce service contracts or maintenance agreements
• Convert project clients to retainer relationships
• Launch subscription or membership offerings
• Develop recurring B2B accounts

Even 12 months of growing recurring revenue meaningfully changes your valuation.

7. Diversify Your Revenue

Address concentration risks:

• No single customer should be more than 10-15% of revenue
• No single product or service should be more than 40% of revenue
• If you're geographically concentrated, expand your footprint
• If you rely on one marketing channel, diversify

8. Strengthen Your Team

Buyers acquire teams, not just revenue. Actions:

• Retain key employees with bonuses, equity, or long-term incentive plans
• Fill any critical skill gaps
• Ensure no single employee is a single point of failure
• Document organizational structure and roles clearly

9. Address Legal and Compliance Issues

Clean up anything that could derail due diligence:

• Resolve any pending litigation
• Ensure all licenses and permits are current
• Review and organize all contracts (customers, vendors, employees, leases)
• Confirm IP ownership (trademarks, patents, proprietary technology)
• Address any environmental, safety, or regulatory issues
• Review your corporate governance documents

Phase 3: Go to Market (6-12 Months Before Close)

10. Prepare Your Marketing Materials

Your broker will help create:

• Teaser / blind profile — anonymous summary to gauge buyer interest
• Confidential Information Memorandum (CIM) — detailed business overview with financials, operations, growth opportunities, and market analysis
• Financial data package — 3-5 years of financials, tax returns, add-back schedules

Quality materials attract quality buyers. Rushed or incomplete packages get ignored or lowballed.

11. Run a Competitive Process

The best outcomes come from multiple qualified buyers competing for your business. Your broker should:

• Identify 50-200+ potential buyers (strategic, PE, individual)
• Screen for financial qualification and strategic fit
• Manage NDAs and information flow
• Facilitate management presentations and facility tours
• Solicit offers with clear deadlines

Multiple offers create leverage. Leverage creates better price, structure, and terms.

12. Navigate Due Diligence and Close

Once you accept an LOI:

• Organize a virtual data room with all requested documents
• Respond to buyer information requests promptly
• Maintain business performance (this is critical — a dip during DD invites re-trading)
• Negotiate the purchase agreement with your attorney
• Complete the working capital peg negotiation
• Plan the employee and customer transition
• Close, fund, and celebrate

The Biggest Exit Planning Mistakes

Starting too late. Most owners start thinking about exit planning 6 months before they want to sell. By then, it's too late to make meaningful improvements. Start 2-3 years out.

Overestimating value. Your business isn't worth what you need or what you feel it deserves. It's worth what a buyer will pay based on financial performance, market conditions, and risk profile.

Ignoring tax planning. Deal structure determines how much you actually keep. Entity restructuring, installment sale elections, and QSBS qualification all require advance planning.

Keeping the business on your shoulders. Owner-dependent businesses sell for less and take longer to close. Delegation isn't optional in exit planning — it's the most important thing you can do.

Letting the business slip during the sale. Revenue declines during the sale process give buyers ammunition to renegotiate. Stay focused on running the business.

Start Your Exit Plan Today

Whether you're 6 months or 3 years from wanting to sell, the planning should start now. I help business owners across California build and execute exit plans that maximize value. Schedule a free call and we'll assess where you are and what to focus on first.