So, You Want to Sell Your Company in 2025…Are You Ready?

Having been in the fractional CFO space for more than a decade now, I am often asked to help address succession planning and exit strategies with business owners. These topics are not just theoretical exercises—they are critical, practical conversations that impact the long-term future of the business and the owners themselves. In fact, we have dozens of current clients that have placed exiting their business as their number one priority to be achieved. However, what I’ve learned through experience is that while the ambition to exit is clear, the pathways to getting there often are not.

For business owners who have spent years building, nurturing, and growing their companies, the decision to sell is rarely easy—and neither is the process. The reality is that exiting a business can take much longer than anticipated, and the journey is filled with challenges that require level-headedness, planning, and strategic foresight. This is where the expertise of a CFO, particularly one who has traveled this road several times, becomes invaluable.

Most businesses begin with passion and purpose. The owner identifies a need in the market, develops a product or service, and builds a company that serves customers and creates value. Over time, the business grows, employees are hired, and processes are developed. The business owner’s focus remains on the company’s success: meeting customer demands, keeping the lights on, and ensuring the team thrives.

However, when the time comes to think about selling, many owners face a hard truth: their business is not ready to sell. Why?  Often it is because the very things that made the business successful—the owner’s involvement, personal passion, and hands-on approach—can often make the company less attractive to prospective buyers.

A common scenario we encounter as  fractional CFO’s is a business owner up to their neck in the day-to-day challenges of running the business. They are focused on operations, solving problems, and managing relationships with customers and suppliers. While this hands-on approach works well to keep the business running smoothly, it creates a significant barrier when it comes to exit planning. The business becomes overly dependent on the owner, making it difficult to envision the company functioning without them. In this state, the business is not a stand-alone, transferable entity—it’s a reflection of the owner themselves.

This reality often comes as a shock. Owners are so entwined in every aspect of their company’s operations that they inadvertently reduce its value to external buyers. Potential acquirers are looking for businesses that are scalable, sustainable, and independent of any single individual. If a buyer perceives that the business cannot function without the owner, it becomes far less attractive, and the timeline for achieving a sale stretches even longer.

The key to avoiding this situation is adopting a think ahead strategy—something many business owners overlook. Exit planning is not something that can be done in a matter of months. It requires years of preparation to ensure the business is structured, sustainable, and attractive to potential buyers.

As a CFO who has worked with numerous clients on exit strategies, I can’t emphasize enough how critical it is to start early. A proper exit plan involves more than just putting a “For Sale” sign on the business. It requires:

1. Streamlining Operations: The business must have efficient systems and processes in place that allow it to operate smoothly, even without the owner’s day-to-day involvement.
2. Building a Strong Leadership Team: A capable and independent management team is one of the most valuable assets a business can offer to a buyer. Prospective purchasers want to see that the company can thrive under existing leadership.
3. Financial Optimization: Cleaning up the financials is crucial. This includes ensuring that financial records are accurate, transparent, and well-documented, while also maximizing profitability and cash flow.
4. Reducing Owner Dependency: The owner must gradually step back from operational roles and empower the team to take on greater responsibilities. This transition can take time but is essential to positioning the business as an independent entity.
5. Personal Financial Coordination: The goal is to maximize the payout post-taxes, so working with a wealth advisor three to five years or more prior to the company sale is best.  For example, a plan of harvesting stock losses can build up loss carry forwards to be used to offset the eventual tax bill triggered the year of the company sale.

These elements require significant planning and execution, which is why waiting until the last minute to start an exit strategy is a recipe for disappointment.

Another hard truth that business owners must understand is that barring the exceptions selling a business is a long and complex process which will likely take longer than expected. While it’s easy to think that once you find a buyer, the deal will be done, the reality is far more nuanced. Here are some of the key reasons why selling takes so much time:

1. Preparing the Business for Sale: As mentioned, the business must be optimized and prepared to attract buyers. This preparation can take six months to three years, depending on the state of the business.
2. Finding the Right Buyer: Identifying a buyer who aligns with the business’s values, culture, and financial goals can take time. Strategic buyers, financial investors, and private equity firms all have different criteria, and it takes effort to position the business accordingly.
3. Due Diligence: Once a buyer is found, the due diligence process begins. Buyers will scrutinize every aspect of the business, including financials, operations, contracts, and legal compliance. This process alone can take several months.
4. Negotiations: Even after an offer is made, negotiations over price, terms, and conditions can drag on for weeks or months. Both parties must align on valuation, earn-outs, and other contractual details.
5. Closing the Deal: Legal and financial documentation must be finalized before the transaction is completed. Issues uncovered during due diligence or final negotiations can further delay the closing process.

Having worked at the oldest and largest fractional CFO practice in the industry for some time now, I have learned the lessons from taking this journey with business owners many times.  For example, we began working with a business owner who wanted to exit their company within 12 months. On the surface, the business looked healthy: strong revenues, a loyal customer base, and a solid product offering. However, when we dug deeper, it became clear that the company was heavily dependent on the owner. The leadership team lacked autonomy, key processes were undocumented, and the historical financials required significant clean-up.

What followed was a two-year process of restructuring the business. We focused on empowering the management team, automating processes, lowering customer concentration, and creating a scalable business model. By the time we brought the business to market, it was a much more attractive prospect, and we were able to secure a favorable deal with a strategic buyer. The lesson here is simple: it takes time to get it right.

If you are a business owner thinking about selling your company, my advice is this: start now. The sooner you begin planning for your exit, the more options you will have, and the better the outcome will be.

Work with experienced advisors– CFOs, exit planners, and M&A specialists– who can guide you through the process. An expert CFO will help you:

• Identify areas of weakness that need to be addressed.
• Develop a roadmap to make the business more attractive to buyers.
• Manage the financial and operational changes required for a successful exit.

The road to selling a business is long, but it doesn’t have to be painful. With the right planning, strategy, and support, you can ensure that the business you worked so hard to build will continue to thrive long after you’ve handed over the keys.

Succession and exit planning may feel like distant priorities when you’re knee-deep in the day-to-day of running a business. But failing to think ahead can have serious consequences when the time comes to sell. Selling a business is not a quick transaction– it’s a journey that requires time, effort, and careful preparation.

By taking the time to plan, streamline, and separate yourself from the day-to-day operations, you will not only make your business more attractive to buyers but also maximize its value. Most importantly, you will ensure that your legacy lives on, and the passion that inspired you to start the business in the first place will continue to make a difference.

As CFOs, we see firsthand the benefits of thinking ahead. The business owners who start early, plan strategically, and seek expert guidance are the ones who achieve the most successful exits. Don’t let time slip away– your exit strategy starts now.

Written by Brad Kayton.
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