Exit readiness starts with evidence, not a valuation

An owner considering an exit in five years will naturally ask what the business could be worth. I would also ask what a buyer, successor or management team would need to understand and trust.

The headline valuation is only one part of that conversation. The evidence behind the business needs attention well before a transaction is planned.

Can someone else understand how profit is earned?

Clear information about contract or service margins, customer concentration, recurring revenue and unusual income or costs helps explain the quality of earnings. Cash generation should also be considered alongside reported profit.

These are practical preparation areas, not a complete due-diligence checklist. The evidence required will depend on the business and the route chosen.

What still depends on one person?

Consider customer relationships, pricing decisions, technical knowledge and financial oversight. If the owner is the only person who can explain or approve each area, a successor may face a difficult transition even when the accounts look strong.

Building capable managers, documented responsibilities and dependable reporting helps the business operate more clearly today. It can also make a future handover easier to assess.

Make preparation useful before an exit happens

Plans change. A sale may become a family succession, a management buyout or a decision to retain the business. Improving its information and reducing unnecessary dependence on the owner can still be worthwhile.

None of this guarantees a buyer, a valuation uplift or a successful transaction. Tax, legal and transaction advice will also be needed at the appropriate stage.

For the next quarter: choose one area a successor would struggle to understand without you, and agree what evidence or responsibility needs to be improved. Exit readiness begins with that work.

Further reading: Connecting five-year ambition to a 90-day plan.