Planning a Business Exit - What Should Happen 10 Years, 5 Years, and 1 Year Before the Sale?

Once an owner understands why succession planning matters and which exit path might fit, the next question is almost always practical: when do I actually need to start? The honest answer is earlier than most owners expect - because some of the changes that create the most value simply cannot be made in the final year.

Think of the years before a sale as a runway. Some improvements need the full length of that runway to pay off. Others can be completed closer to takeoff. Understanding the difference is what separates owners who exit on their own terms from owners who are forced to accept whatever the market offers on short notice.

10 Years Out: Lay the Foundation

A decade before a likely exit, the priority is structural, not cosmetic. This is the point to:

• Identify the most likely exit path - family succession, sale, employee ownership, or another route - even if the choice may change later.

• Clean up entity and equity structure so ownership, governance, and documentation can withstand scrutiny.

• Begin strengthening management depth, so the business is not entirely dependent on the owner for every key relationship and decision.

• Start diversifying the customer base if revenue is concentrated in a small number of accounts.

These are changes that take years to mature. A management team cannot be built in a quarter, and customer concentration cannot be fixed with a single new contract.

5 Years Out: Build the Track Record a Buyer Will Underwrite

With five years remaining, the focus shifts from structural change to building an established basis for valuation. This is the window to:

• Validate and strengthen the specific drivers of business value - recurring revenue, margin quality, and growth trends.

• Tighten and document customer, vendor, and employment contracts, including any change-of-control provisions.

• Normalize financial statements so add-backs and adjustments will hold up under a buyer's scrutiny.

• Begin family and co-owner conversations about expectations, fairness, and timing, well before a transaction is imminent.

A buyer, lender, or successor evaluating your business five years from now will be looking at a consistent, multi-year pattern - not a single good year just before a sale.

Final 24 Months: Assemble the Team and Prepare the Story

In the last one to two years before going to market, the work becomes tactical and specific:

• Select the advisory team - M&A attorney, CPA or tax counsel, wealth advisor, and, if appropriate, an investment banker or business broker.

• Prepare diligence materials in advance, rather than scrambling to assemble them once a buyer asks.

• Refine the story a buyer will hear: what drives the business, what risks have been addressed, and why the growth trajectory is credible.

• Address tax and personal wealth planning decisions that affect how much of the sale price you actually keep.

This final stretch is where preparation converts directly into negotiating leverage. Owners who arrive here having already done the ten-year and five-year work are negotiating from strength. Owners who try to compress all of it into the final 24 months are negotiating from behind.

The Point: Value Can Only Be Lost, Not Created, at the Last Minute

A concentrated customer base, thin management depth, messy financials, or an unresolved family conversation cannot be fixed in the weeks before a term sheet arrives. They can, however, be addressed calmly over five or ten years - which is the entire argument for starting the runway now, regardless of when you actually intend to exit.

The next article in this series turns to operational readiness directly: whether your business is truly a business, or whether it is, in practice, still just a job you happen to own.

Contact Our Team: 

Jordan Martell is a business savvy attorney with a mission to support institutions that are the backbone of thriving communities: local employers and businesses. He believes strong local economies built strong, resilient communities.

Holly M. Weber is an experienced attorney who specializes in helping people plan for ownership transitions, business sales, and long-term succession. She works with closely held and family-owned companies to address the legal, tax, family, and practical issues that can determine whether a transition succeeds or stalls. Holly’s goal is to help owners protect what they have built and exit on their own terms, whether through a sale, family succession, management transition, or other planned exit.

If you are wondering where your own business stands, contact us at (260) 423-9551 to schedule a confidential Business Succession Readiness Conversation today.