Planning an Exit Strategy: Top 10 Mission-Critical Steps for Selling Your Business

(For this month's Vets to Venture article, we partner with Brandon Harris, an M&A Advisor with Graystone International and a U.S. Marine Veteran. Brandon teams up with Adams & Reese Corporate Services Partner and U.S. Navy Veteran Sean Buckley to discuss exit strategies for business owners.)

Whether you are retiring or pursuing a new venture, every business owner needs an exit strategy. For veteran entrepreneurs, just as every mission requires a plan, so does a business exit. Your military experience offers a unique advantage in exit planning, where discipline, risk management, and strategic thinking are invaluable.

Here are 10 mission-critical steps to guide your successful business exit.

1. REDCON (Readiness Condition): Get a Three to Five-Year Head Start

The most common mistake sellers make is not preparing early enough. Selling a business is not a quick transaction; it is a campaign that can take a year or more. Ideally, business owners should start planning their exit three (3) to five (5) years in advance. This timeline allows you to proactively address potential issues and position your business at maximum value.

2. Assemble Your Command Staff and "Deal Team"

Early in the process, assemble your “deal team”– usually comprising of an M&A advisor, a CPA or tax professional, and an M&A attorney. The M&A advisor will assess valuation, identify qualified buyers, and manage the marketing of your business. The accountant will conduct financial due diligence and structure the transaction to optimize tax outcomes. The attorney will draft the purchase agreement, manage legal due diligence, and facilitate a smooth closing. Engaging these professionals early ensures a streamlined process and maximizes your transaction value.

3. Define Your Mission's Objective

Before executing your exit strategy, clarify your endgame. Why are you selling – are you retiring, starting a new venture, or seeking a partial exit to bring in a partner? Are you aiming for maximum profit, rapid redeployment, or a buyer who will continue your unit’s legacy? Your mission objective will guide every tactical decision along the way. Your motivation will dictate the type of buyer you seek and the deal structure you are willing to accept. Be clear on your goals and what a successful outcome looks like, and your “deal team” will act accordingly.

4. Realize When Selling is Optimal

Not every business is ready to sell. Advisors look for companies that have been operating for a minimum of six (6) years and with consistent growth over at least the last three (3) years. A healthy financial baseline is crucial as this demonstrates stability and profitability to buyers.

5. Recon Your Business Value

A common mistake is having an unrealistic idea of what your business is worth. The best way to get a clear picture is to have a professional valuation and assessment. An M&A advisor can assist with this, and in most cases, they will do it for free. Just as you would never enter a mission without intel, do not go to market without knowing your business’s true value.

6. Drill Your Operations

Before a buyer starts poking around, conduct a reconnaissance mission of your business. Identify red flags that could lower your valuation or kill the deal. Common issues include poorly maintained financial records, unwritten employee contracts, or lack of documentation. A business that runs like a well-oiled machine is more attractive to buyers. Standardize your SOPs (Standard Operating Procedures), empower your team, and address any operational vulnerabilities.

7. Prepare for the Inspection (Due Diligence)

Buyers will review every aspect of your business. For example, the buyer will want to verify your revenue, expenses, profitability, and cash flow. Have your financial statements, tax returns, and budgets in order. A “Quality of Earnings” report prepared by your accountant can address a buyer’s financial questions. Your lawyer also plays a key role in the due diligence process – helping you gather essential documents, including corporate records, contracts, and IP. The buyer will also want to review daily operations intel, such as organizational charts and employee handbooks, to ensure the business can run smoothly after you leave.

8. Avoid Common Mistakes (and Trenches)

When preparing to sell, many business owners make common mistakes that can jeopardize a deal or significantly reduce the company’s value. Here are some trenches to avoid falling into:

• Owner dependency: If the business is overly reliant on you, then it is a huge red flag for a potential buyer and could become a liability. You need to build a capable team and establish systems and processes that allow your business to operate independently.
• High customer concentration: If a single customer accounts for a large percentage of your revenue (e.g., more than 10-15%), it can spook a buyer. They will be concerned about losing that customer and the impact it will have on the business. Diversify your customer base.
• Unrealistic valuations: Many owners have an inflated sense of what their business is worth. Getting an independent valuation early in the process provides a realistic benchmark and helps you set achievable goals.

9. Lean on Your Command Team to Negotiate

The negotiation phase is where your ability to remain calm under pressure and stick to the mission will be tested. Be prepared for a back-and-forth process and rely on your command staff – your “deal team” – for support during these talks. Your deal team will hammer out the terms: payment structure, treatment of your team, any non-compete clauses, and NDAs (non-disclosure agreements) needed to protect sensitive intel during negotiations.

Your deal team will also work with the buyer’s deal team on all negotiations, including the price, and other key terms of the deal, including such things as indemnification (a clause that allocates responsibility for future liabilities); working capital; and owner’s post-closing role.

10. Close & Conquer

The days leading up to closing can feel like a final assault. It is often a high-stress, fast-paced environment with last-minute demands from the buyer. This is where your discipline will shine. Work closely with your deal team to manage the final document reviews, secure all necessary signatures, and finalize the wire transfers. This is the moment you have worked toward for years.

With your team’s support, you will execute the final handoff, transition the business to its new owner, and successfully complete the mission. This is not just a business transaction; it is the culmination of your service as an entrepreneur. The final close is your opportunity to exit on your own terms and move on to your next mission.

Conclusion

The business landscape is constantly evolving, and a smart exit strategy must account for current trends. The economy shifts, new government administrations bring new laws, artificial intelligence tools impact your operations, and unexpected circumstances can arise. As veterans, you have been taught to plan for the worst and hope for the best. This mentality is a major asset.

Always have an exit strategy – even if you are not planning to sell. It is a fundamental part of building a resilient and valuable business. As they say, everyone has an exit strategy, whether you planned it or not, but it is better to proactively create a strategy that allows you to leave on your own terms rather than being forced out by unforeseen circumstances.

By being proactive, building a strong team, and addressing potential issues early, you can maximize your company’s value and ensure a smooth transition when the time comes.

About Our Authors

Brandon Harris is a Marine Corps combat veteran, turned serial entrepreneur, and M&A Advisor. As an M&A Advisor with Graystone International, Brandon leverages his entrepreneurial experience to help business owners navigate the complexities of selling businesses. Brandon is also the CEO & Founder of Smoke N Memories, the world’s first veteran-owned mobile cigar bar and boutique tobacco company that delivers premium cigars for private events.

Sean Buckley is a Partner in the Adams & Reese Corporate Services Practice Group. Sean advises clients on the purchase and sale of equity and assets, business contracts and disputes, and on a diverse array of corporate services matters including real estate transactions, entity selection and formation, corporate governance, and franchise opportunities. Sean is a veteran U.S. Navy Officer and co-founder of the Adams & Reese Vets to Ventures Blog.

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