If you run a company day-to-day, make it your business to always prepare for a potential sale—whether it ever happens or not. This looks like setting growth-oriented targets and hitting the mark, innovating incentives to align your team on the top and bottom line, and investing in systems, technology, and people who are invaluable to your market segment.
But knowing when you’re ready to begin the process of selling? That is a deeply personal question, one that varies for each person and business. Ask yourself: What do you envision for the next five years? What do you want your day to look like in terms of freedom, allocation of time, and financial independence? This soul searching should prepare you for succession planning, capitalization options to de-risk, and what life after your business could look like.
Always Be Prepared — Why Every Founder Should Plan for a Sale:
If someone had asked me in 2019 whether I’d ever step down as CEO and sell my company, I would have responded with an ever-resounding ‘no’. But then, life happened– the parts we don’t plan. COVID hit without warning, and like many women out there—especially moms—I found myself at a breaking point. The responsibility of running a home care company and keeping our country’s grandparents safe, while also trying to support my twin sons as a single mother, was too much weight to bear. One of my sons, who is autistic, lost nearly two years of academic growth with no school structure and a lack of socialization. When it came time for him to transition to post-high school life, I knew something had to give. I could no longer be everything to everyone, and the right thing for my family was preparing for a new CEO to step in and lead the business I had built, so I could finally have more flexibility for my sons.
What I didn’t expect as I undertook the sales process was for my role as a leader and passionate advocate for the business to be discounted. Despite my two decades of experience as Founder and CEO, I was strongly encouraged to take a back seat, not attend management meetings, and downplay my involvement. I struggled with the balance of using my voice as the company’s CEO for over 20 years, with the need for flexibility to support my autistic son through his journey. I knew the business better than anyone and had built a name for myself in the world of healthcare and franchising. Yet I felt my commitment to the business was discounted by potential buyers, which was frustrating and, at times, heartbreaking. But that disconnect made one thing clear: I had to take back the reins of the process and advocate for the role I did want to play.
Taking Control of Your Business Sale Process
There were offers on the table from potential buyers, but it became clear I had to find the right “culture fit” for my brand, for my team, and for my future role in the company. I found my voice and began listening to my gut, and went back to several potential buyers that actually didn’t stay in the process longer because they were ‘spooked that I wouldn’t be more involved’. Many buyers were led to believe I didn’t want to be involved, but nothing could be further from the truth. I didn’t want 70+ hour weeks and all the pressure of the day-to-day operations, but I am as passionate today as I was about our business and differentiation of quality more than 20 years ago when I founded it.. So, I started meeting 1:1 with PE firms I felt were a good fit, and the choice became clear.
I chose to exclusively partner with Peak Rock Capital—not because they offered the highest number on paper, but because they valued my vision, respected my lived experience, and welcomed my continued involvement in a way that gave me space to prioritize my son while still contributing strategically. It was the perfect fit—and that matters more than any metric.
Keep in mind, some outsiders may have different motivations. But no one has as much at stake or has invested as much as you have. Seek advice from an outside source looking in. It’s important to flag that employees are usually motivated by the ability to cash-in on a transaction, not all PE’s are Founder-friendly and many in the process are paid for the deal, whether or not it’s the RIGHT deal for you.
So, how do you know you’re really ready to sell?
7 Essential Steps to Prepare Your Business for Sale:
- Focus on growth and predictability with sustainable business results for an optimal exit valuation.
Buyers pay a premium for predictable performance. In the 24 months leading up to a sale, aim to hit your budget consistently—within 5% quarterly, and 100–105% annually. This isn’t the time for hockey-stick projections. It’s about proving your business can perform with discipline, growing both on top line (revenue) and bottom line (EBITDA). - Build a bankable management team.
Think about the team who will survive past the sale and will grow along with the business over the long term. Most private equity investors are looking for the leadership team to thrive beyond your involvement. Ideally, two-thirds of your leadership team will stay on post-sale. Start investing in that team early—long before you’re ready to exit. - Select advisors who are invested in the sales process.
Once the business has a trend line of growth and a solid management team, it’s time to interview investment bankers and select one who feels like the right fit and understands your differentiation. Make sure you meet the people on the team who will actually be your day-to-day primary contacts, not just the high-level ones that pitch the business and are not involved much until the very end. The investment banker will identify potential buyers to participate in the process – some will be a good fit, and others may just be PE that the investment banker has had repeat business with and sends your “book” as a favor. Ask your network for recommendations of PE firms that are Founder-friendly and ferret out firms with a bad reputation. Once you secure the investment banker and a mutually curated list of potential buyers, key messaging should be crafted around differentiation, areas of opportunity, and financial growth trends. - Decide how long you want to remain an active CEO before entering the sales process.
This is critical. If you’re not planning to stay in the CEO seat for at least two years, begin succession planning 18–24 months out. A strong new CEO, well-positioned before the sale, can increase your company’s valuation and ensure a smoother transition. The buyer will want at least a three-year commitment with whoever is in the hot seat at closing time. The buyer may choose to replace the CEO, but it will be their choice. If you, as Founder, will rollover significant equity and are willing to be an active board member post-sale, leverage your passion and strategic insights in management meetings with buyers and include your CEO actively in the meetings. If you as the Founder will remain CEO during sale and post-sale, consider bringing in a personal advisor to run point on deal matters. The CEO must have bandwidth to focus on day-to-day operations and ensure during the process that the company is hitting its numbers. - Beware of messy success bonuses or payout potential.
Only a few team members should be aware of the sales process. Run a tight ship before the sale and keep very few cooks in the kitchen. You don’t want your team anxious or disappointed when they don’t realize a monetary event if the sale drags on or if you decide not to sell. For as long as possible, limit to your CFO and members of the finance and legal team. - Clearly define your “buyer story”.
The most important question is: Why are you selling and what will your role be post-sale? You may be asked to make a material rollover investment into the new company. Focus on the opportunity to serve more customers by accessing incremental investments and expected return on investment. - Be honest about what matters most to you.
Your revenue targets and exit valuation matter—but so does your life after the sale. For me, it wasn’t just about hitting $1 billion in system-wide revenue anymore. COVID happened, and the $750 million dollar system-wide revenue threshold plus supporting my son through his adult transition was more than enough. I knew I didn’t want to continue as CEO and definitely didn’t want to commit to that role for 3 years post-sale. It was about having the freedom to show up for my son in a way I hadn’t been able to before. That clarity was everything.
How soon should I sell?
I recommend starting to prepare 24-36 months out so that two years from an exit, you have the right team and company performance in place. It can take up to a full year from the selection of the investment banker until the sale is completed.Preparing a business for sale isn’t just financial. It’s emotional. It’s about values, legacy, and the next chapter—for your company and for you.
Need help preparing your business for sale? Founder 2 Founder guides Founders who will be above $5M EBITDA in the next 24 months through the entire buyer identification and selection process. Learn more about our exit planning services.
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