At DCBKK last week, Pete Schuh and I ran an Exit Prep workshop for business owners. The room was packed, and it was clear how much the topic mattered.
Our main message was simple: if you want the best outcome when you sell, start early.
Most owners start exit planning too late. They wait until they want to start the sale process, but by then, it’s too late to really make a difference in the story you’re selling.
You can still clean up the books and prepare for due diligence.
But you can’t change how the business has been built and run. You can’t rewrite the story that drives your valuation multiple.
It’s Not Just About the Numbers
Most owners think their business is valued as a multiple of profit. And that is true in most cases. In some cases, it is a multiple of revenue.
But the multiple isn’t fixed. It depends on the story behind the numbers.
Buyers don’t just buy your financials. They buy the future potential of the business. They want to see momentum, consistency, and proof that the business can keep growing without you. They want to see upside and understand the risks.
A strong story earns a higher multiple. A weak or unclear story drags it down.
Two businesses with the same earnings can sell for very different prices. All because one tells a stronger story about where it’s headed.. The other leaves buyers unsure.
The Two Parts of a Strong Story
Every business story has two parts: hygiene factors and valuation multipliers.
Hygiene factors are foundational.
Having them in place won’t increase your multiple, but missing them will hurt it.
Think clean books, proper contracts with team members, defined processes, et cetera.
When buyers see messy books, no documentation for revenue or expenses or missing contracts, they see risk, and it hurts trust. And lack of trust is the #1 deal killer.
Valuation multipliers create value.
These are what make buyers lean in. A predictable growth engine, recurring revenue, a strong brand, scalable operations, and a clear strategy for what’s next.
These are what lift your multiple. They show that the business’s success runs on systems, not luck.
Both parts matter.
Without hygiene, no one believes your story.
Without valuation multipliers, you’re leaving money on the table.
As an extra bonus, running the business with an exit in mind actually allows you to keep owning and running it with limited involvement. This helps your leverage in an exit process, as it is easier for you to walk away, just keep owning it.
Why Timing Changes Everything
The story you tell about your business takes time to build.
If you have a 5-year plan, and you have successfully executed 2 years of it, and you are close to the target, then you have a much stronger story on where the business could be going in the next years, as you have proven your ability to deliver on your plans.
Showing a potential buyer the plans, the quarterly updates, and your learning curve throughout the process builds trust and thus reduces (perceived) risk.
If you start early, you can build your business AND your exit story at the same time. You can strengthen the foundation, test your plans, and prove results that make your story more compelling.
If you start late, you can still clean up what’s messy. You can still solve some, if not most, of the hygiene factors. But you can no longer build a credible story that gives you a higher multiple.
That’s when owners leave money on the table.
Your Exit Starts Today
Exit planning means keeping your options open and being ready when the right opportunity comes, instead of scrambling at the last minute.
The earlier you start, the stronger your story and the higher your multiple.
Want forward-looking numbers you can act on? See how our FP&A service works.
