Ep. 96 Exit Readiness: How to Prepare Your Business for Sale
Many business owners assume they are five years away from selling their company. The problem? That five-year window often remains constant, year after year. Without proper planning, the timeline for exit can keep getting pushed back until it’s too late to maximize value and ensure a smooth transition.
In a recent episode of the Live Life Liberated podcast, Centura Wealth Advisory’s Zoe Singh sat down with Andrea Steinbrenner, CEO of Exit Consulting Group (ECG), to discuss what it truly takes to prepare for an effective business exit. Listen to the full episode here:
Exit Consulting Group has developed a structured approach to exit readiness that evaluates a business across three core areas:
- Business Readiness: Can the company operate smoothly without the owner? If the business owner stepped away tomorrow, who would run sales, finance, vendor relationships, and daily operations?
“Is the business ready to operate without that owner or leader?” – Andrea Steinbrenner - Market Readiness: Does the business have market value? What are similar companies selling for? What financing conditions will potential buyers face?
“We run a valuation on the firm and we say, okay, here’s where we think the fair market value is laying up. Are there buyers out there who will pay this for your company?” – Andrea Steinbrenner - Owner Readiness: Is the business owner mentally prepared to transition? What will they do once they step away from their company?
“A lot of people will tell us, ‘Oh, we’ll go golfing, we’ll go fishing.’ Well, I guarantee there’s only so many days you can do that before you need to do something else.” – Andrea Steinbrenner
Understanding the Exit Timeline and Sales Process
Selling a business is not an overnight decision—it requires strategic planning and execution. Andrea outlined the key steps in the process:
- Business Valuation & Market Research: Determining a fair market price based on industry trends and financial performance.
- Confidential Information Memorandum (CIM): Creating a detailed marketing document to attract potential buyers.
- Buyer Vetting & Indications of Interest (IOIs): Screening potential buyers and negotiating initial terms.
- Letter of Intent (LOI): Once a preferred buyer is identified, an LOI is signed to enter an exclusive negotiation period.
- Due Diligence: The buyer reviews financial records, legal agreements, and operational details.
- Final Negotiations & Closing: Legal documents are finalized, funds are transferred, and ownership transitions.
“Most companies get a minimum of a hundred NDAs, but you can get hundreds of them. From there, we collect what’s called IOIs—Indications of Interest—so we can begin narrowing down the right buyer.” – Andrea Steinbrenner
Internal vs. External Business Sales
Business owners often sell to either an external buyer (such as a private equity firm or strategic buyer) or an internal buyer (such as a family member, key employee, or business partner). Each approach has distinct challenges and benefits.
For internal transitions, emotions and expectations must be carefully managed. Employees or family members may not fully grasp the complexities of ownership.
“First, we have to bring them up to speed… These are now people who have access to information that before they didn’t.” – Andrea Steinbrenner
Meanwhile, external sales involve finding the right buyer, structuring the deal properly, and optimizing the tax implications of the sale.
The Role of Tax Planning in Business Exits
Centura Wealth Advisory emphasizes that the best time to start tax planning is before signing an LOI. According to Zoe Singh, business owners fall into three categories:
- Gold Period: Before signing an LOI—this is when the most tax strategies are available.
- Silver Period: After signing an LOI but before December 31 of the tax year—some strategies are still possible.
- Bronze Period: After the tax year of sale—minimal tax strategies remain, and most tax liabilities are locked in.
“The best time to start tax planning is two to three years before an exit. That gives business owners the flexibility to optimize their tax strategy and ensure their wealth is preserved.” – Zoe Singh
The Bottom Line: Start Preparing Early
Business exits are complex, but the earlier you start preparing, the smoother the transition will be. Whether you’re planning to sell in one year or five, taking proactive steps today can maximize your business’s value and secure your financial future.
For business owners considering an exit, working with experienced professionals—like Centura Wealth Advisory for tax planning and Exit Consulting Group for transaction guidance—can make all the difference.
“The worst outcome is splitting up partnerships and families. Our goal is to find a path that everybody can agree with.” – Andrea Steinbrenner
Connect with Zoe Singh:
Connect with Andrea Steinbrenner:
Connect With Centura
At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.
We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.
Connect with our team today to learn how we can help you navigate complex financial decisions and secure your financial future with confidence.
Disclosures
Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.
We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.
For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.
