As the day-to-day leader of your business, it’s vital to consistently prepare for the possibility of a sale—regardless of whether that day actually arrives. This preparation might include setting measurable growth goals, innovating team incentives that align with company objectives, or investing in essential systems, technology, and personnel that are key to your market position.
However, recognizing when you’re ready to embark on the selling journey? That’s a deeply individual matter, varying from one entrepreneur to another. Reflect on your aspirations for the next five years. How do you want to allocate your time, freedom, and achieve financial liberty? Taking this time will assist in structuring your succession plan, de-risking financing avenues, and envisioning life beyond your business.
When asked in 2019 if I would step down from my role as CEO and sell my company, my answer would have been an emphatic ‘no’. Yet, life took unforeseen turns. The pandemic struck suddenly, pushing me to my limits as a working mother, especially during a time when support systems were failing.
Managing a home care business while ensuring the safety of vulnerable clients, alongside being a single mother to twins, was incredibly challenging. My son, who has autism, missed nearly two crucial years of education and social interaction due to the pandemic. When it became time for him to transition to adulthood, I knew I had to make a significant change to allow for a new CEO to lead the enterprise I had built, granting me more time and flexibility with my family.
To my surprise, as I navigated the sales process, my role and passion for the company were often undervalued. Despite my extensive experience leading the company, suggestions were made for me to take a step back, refrain from attending meetings, and minimize my presence. Struggling to reconcile my long-standing commitment to the business with the necessity for flexibility for my son’s needs was tough. I knew the inner workings of my company better than anyone, yet potential buyers seemed to downplay my dedication, which was both frustrating and quite disheartening. This disconnect highlighted a crucial reality: I needed to reclaim my role in the process and advocate for the involvement I truly desired.
Multiple offers arrived from various buyers, but I understood that finding the right cultural fit for my brand, my team, and my prospective role was paramount. Learning to listen to my intuition led me to revisit several potential buyers who had initially opted out, fearing my potential lack of involvement. Misperceptions often circulated suggesting I didn’t wish to take an active role, but that was far from accurate. I was not interested in the grind of 70+ hour weeks, yet I remained as passionate about our mission and quality as I was when I founded the company over two decades ago. Meeting one-on-one with private equity firms that aligned with my values made it abundantly clear who I was meant to partner with.
Ultimately, I chose to work exclusively with Peak Rock Capital—not because they made the highest offer, but because they appreciated my vision, respected my personal journey, and welcomed my continued involvement in a manner that allowed me to prioritize my son’s needs while still making strategic contributions. This bond was invaluable—and often outweighs financial figures.
Remember, potential buyers might have varied motives, albeit well-intentioned. Nevertheless, no one is as invested in your company as you are. It’s crucial to consider advice from external perspectives while noting that employees often focus on their interests when a transaction occurs, and not every private equity firm is aligned with founder welfare.
So, how can you determine if you are truly prepared to sell?
Here are seven essential insights every founder should keep in mind before engaging with buyers:
1. Prioritize growth and consistency for favorable business performance leading to optimal exit valuation
Buyers are willing to pay more for predictable results. Strive to meet your projected budget consistently in the 24 months leading to a sale—aim for within 5% quarterly and 100–105% annually. This isn’t the moment for unrealistic forecasts. It’s about demonstrating your capacity to operate with reliability while enhancing both revenue and profitability.
2. Cultivate a reliable management team.
Consider the team that will endure beyond the transaction and foster growth long-term. Most private equity firms seek a leadership team capable of sustaining success beyond your tenure. Ideally, keep two-thirds of your leadership intact after a sale. Start investing in their development well in advance of an exit.
3. Select advisors passionate about the sales process.
Once your business demonstrates growth trends and has a robust management team, it’s time to interview investment bankers and choose one who resonates with your vision and understands your unique selling proposition. Ensure you connect with the individuals on their team who will handle your account on a daily basis, rather than just the executives who present the business. The investment banker will curate a list of potential buyers—some may align, while others may simply be firms they’ve worked with before. Seek out private equity firms known for their founder-friendly reputations, and discern those with less favorable histories. After securing the investment banker and collaboratively identifying potential buyers, develop key messaging centered on differentiation, growth possibilities, and financial trajectories.
4. Determine how long you wish to maintain active involvement as CEO before commencing the sales process.
This is essential. If you plan to exit the CEO role within the next two years, begin your succession planning well in advance—18 to 24 months before the sale. A strong successor, prepped prior to the sale, can enhance your company’s value and provide a seamless transition. Buyers generally want a commitment of at least three years from whoever is in charge at closing. They might choose to change the CEO, but the decision will rest with them. If you as the founder will retain significant equity and be active in an advisory capacity post-sale, leverage your expertise in strategic discussions with buyers. If you intend to remain as CEO during and after the sale, consider bringing in a personal adviser to oversee the deal. The CEO should remain focused on operations while ensuring that the business meets its financial objectives throughout the process.
5. Exercise caution regarding unnecessary bonuses or payment potentials.
Limit the number of team members informed about the sales process. Maintain a discreet approach leading up to the sale to avoid unnecessary anxiety or disappointment among your team. Only involve your CFO and select finance and legal team members in the initial stages.
6. Clearly articulate your “buyer narrative”.
Why are you selling, and what role do you envision for yourself post-sale? There’s a chance you may need to make a material roll-over investment in the new company. Focus on the chance to expand your customer base through additional capital and expected returns.
7. Be transparent about what’s most meaningful to you.
Your revenue goals and intended exit strategy are important—but your life beyond the sale carries equal weight. For me, it evolved beyond simply achieving $1 billion in system-wide revenue. With the pandemic’s impact, the $750 million goal and ensuring my son’s transition into adulthood became my priorities. I realized I did not desire to remain in the CEO role nor commit to that position for three years thereafter. What mattered was the freedom to be present for my son in a way I hadn’t previously managed. That insight was transformative.
When should you start preparing to sell? Ideally, you should begin the process 24-36 months prior, ensuring that two years out you have the right team and business performance in place, as it can take a full year from selecting the investment banker to closing the sale.
Preparing a business for sale extends beyond mere financial preparations. It taps into the emotional aspects, focusing on values, legacies, and the journey ahead—for both your business and for yourself.
Ready to Sell Your Business… or Just Thinking About It?
Before you take the leap, make sure you’re truly prepared — financially, operationally, and emotionally.
Our Founder Exit Readiness Checklist walks you through the real questions every founder should ask before starting the sale process.
Whether you’re 36 months out or starting to plan now, this 1-page guide will help you:
✔️ Evaluate your leadership team
✔️ Clarify your personal goals
✔️ Identify gaps in financial readiness
✔️ Define your ideal exit strategy
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