Many of us still have the Succession theme song bouncing around in our heads following the finale of the HBO Max hit series. If we have learned anything from this show about an ailing media tycoon’s family battling to take over the reins of power, it is the importance of having a written, viable plan to transition your business and avoid any uncertainty.

Here are five considerations for every business owner who expects to exit three to five years from now, no matter whether the exit is in a sale or a transition to the next generation. If you are starting to think about exiting completely, or selling just a portion of your company, here’s where to start.

Get Organized

The first step to making sure your business is ready to sell is to get organized. Organization is not limited to bookkeeping activities; it includes verifying that full and appropriate documentation exists for every aspect of your business. Look at sales contracts, employment agreements and all possible areas where you need to mitigate potential exposure to the current owners or potential buyers.

Hire Experts

Selling a business requires the expertise of many different professionals. Start by hiring a certified public accountant firm to learn exactly what your finances are well in advance of a letter of intent to sell. Evaluate CPA firms that provide bookkeeping, audit support and tax-planning services. A good CPA firm can also advise on potential tax implications from the sale, and how to best plan for the windfall.

Next, retain a law firm to help structure the deal from a mergers-and-acquisitions standpoint to ensure the most tax-efficient structure. In situations where the next generation is taking over, the earlier you start planning, the better to shift the equity in the company.

You’ll also need an exit adviser who oversees the entire process from business valuation to final closing. Look for designations such as certified exit planning adviser, or CEPA, for expertise.

And consider hiring a business broker to bring your company to market once it’s ready for sale. This person can help to maximize the sale price.

Maximize Your Selling Price

Most business valuations start with EBITDA, or earnings before interest, taxes, depreciation and amortization. Certified public accountants and exit advisers can help evaluate different business lines to reduce expenses and increase profits. Tax planning is not technically part of EBITDA, but companies need to focus on tax planning as well to keep as much capital in the business as possible to fuel growth. Strategies vary across industries, so look for advisers who are well-versed in your industry.

Working with a valuation professional can also help identify portions of your business, such as future contracts or strong client lists, to help improve the multiple on the sale price.

Coach the Next Generation

To transition leadership responsibilities to the next generation, consider working with executive coaches to ensure a seamless handoff. Working with family members can present unique emotional, psychological and business challenges. Often, hiring a third party to bring the younger generation up to speed is a great investment over time.

Consider introducing the next generation to key customers, suppliers or other important relationships that are crucial to operational efficiency.

Stay Focused

It’s normal to get a case of “senioritis” when you are close to selling your business, but it’s important to remain focused. Many deals are structured with an earn-out clause in which management may have to stay involved in the business for years after the sale. These clauses often have specific milestones that, if not met, can result in lower payments from the sale.

By continuing the behaviors that helped you grow the business in the first place, you can ensure that the full earn-out payment will be made. 

This article was originally published in the August 2023 issue.