Selling a business - How long does it take and what advisors do I need?

Selling your business is a major milestone - perhaps you're thinking about retirement, or moving on to a new chapter of business. Perhaps you want to maximize your payout in a partnership. Whatever reason you have for selling, exiting your business requires careful planning. From choosing the right advisors to creating a clear exit strategy, each step can impact your success. In this article, we'll cover the key advisors you'll need and the ideal timeline to maximize your business's value.

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When Should an Owner Think About Exiting?

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We recommend thinking about exiting 5-10 years before. This might sound excessive, but to maximize your exit, many business processes must be streamlined to work without you, so that the business is successful after you are gone.

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Keep in mind, many owners choose to sell in a shorter time frame. It is perfectly doable (and what we see the most), and the below illustrates ideal conditions. However, being more methodical and deliberate often yields the highest value.

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What might those 5-10 years look like? Below is a list of steps to take for a successful exit, in chronological order. However, every business is unique, and this timeline can be adjusted to fit your specific needs and circumstances.

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Clarify Goals and Vision

• Where would you like your business to be after an exit? Where would you like to be? Business plans and balanced scorecards can help define your goals.
• Start thinking about who you would like to sell to. If a family business, who would be your successor? Would you sell to a strategic buyer (a competitor), or a financial buyer(private equity)? Furthermore, would you like to sell to your employees (ESOP)?

Business Valuation

• This step isn’t mandatory but provides valuable insight into your current position. While business valuations can be costly, they offer a clear understanding of your business's worth.
• Valuations can help identify where your business currently stands, and identifies any gaps or weaknesses that might reduce its market value.

Strategic Planning

• This is different for every business, but identifying goals and objectives to reach can help motivate you and your employees to reach certain milestones.
• We recommend using a balanced scorecard approach with Key Performance Indicators (KPIs) to measure your progress.

Streamlining Operations

• Buyers want a business that runs smoothly without the owner. A business that runs without heavy reliance on the owner commands a higher valuation.
• Set up Standard Operating Procedures (SOPs), documentation that outlines how each position, department, and process should operate. SOPs ensure consistency, efficiency, and make the business less reliant on any individual, including you. They also add value by demonstrating to potential buyers that the business can run smoothly without extensive onboarding or reliance on the current owner.
• Automate repetitive tasks, and consider hiring consultants to identify inefficiencies.

Build a Strong Team

• Like our point above, a strong team ensures business continuity after you are gone.
• Assess current leadership and identify any gaps that need to be filled. Consider existing employees that can transition to leadership, or look for outside hires.
• Delegate responsibilities and provide leadership training to ensure your team has the necessary skills required.
• Incentivize key employees to stay, by offering retention bonuses, equity, raises, promotions, etc.

Strengthen Financials

• Another mandatory step, buyers will scrutinize your books and look for any material weaknesses that could reduce their offer to you.
• Ensure your financial records are clean, with supporting documentation attached where necessary (invoices, POs, accrual schedules, etc.)
• Reduce discretionary expenses to present a true picture of profitability.
• Diversify revenue streams and eliminate reliance on a single customer or market.
• Use a firm like ours to help prepare your books for due diligence/audit/Quality of Earnings (QoE).
• Use a CPA firm to audit your books, giving you a better understanding of your financial health.

Address Risks

• Resolve legal, compliance, IT, or operational risks that could deter buyers.
• Examples include ongoing litigation, cybersecurity (SOC 2 and alike), streamlining operations or cleaning your finances.

Engage Advisors

• Determine and build a strong team of advisors (which we'll cover below) to help maximize your success.

Prepare for Due Diligence

• Assemble all necessary documentation, such as financial statements, contracts, SOPs, etc.
• Engage with an advisor that can perform mock due diligence, audit, QoE to identify any red flags. If you did a valuation previously, this is a great starting point!

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What Advisors are Needed?

Here’s a list of key advisors commonly engaged to ensure a successful business exit. While not every business will require every advisor listed, assembling the right team is essential for maximizing value, and ensuring a smooth transition.

Starkmont Financial has partnered with many exceptional advisors and can connect you with the right professionals to support your business exit planning process.

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Accounting Teams (Internal and External)

To help prepare for a business sale, you should have two teams. Per regulations, you cannot use one team for both (independence).

One will help with your internal finances, looking for material weaknesses, gaps in compliance, and help streamline and clean your books. This is something Starkmont Financial specializes in, whether it is for an audit, QoE, or due diligence.

Your external accounting team will either provide a business valuation, QoE, or audit. Engage with a CPA firm on this one, or reach out to us for a curated list of expert CPA firms.

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Business Broker or Investment Banker

A business broker can help bring your company to market, curating a list of potential buyers and guiding you through the process. They can help advise on small to mid-sized businesses, where financial complexity is not required, and you want to sell your business to a strategic buyer. A business broker can provide a basic valuation, marketing, handling negotiations, and facilitate due diligence.

If you business is more complex or has an enterprise value above $10M, consider an investment bank instead. Contrary to what you hear about investment bankers on the news or media, there are many small investment bank firms who don't wear suits or Patagonia vests. An investment banker will provide an in-depth valuation, financial & market analysis, financial modeling, marketing, and structure deals to help maximize value for you. They are best if you want to also consider private equity as a buyer, who will have a much more stringent process and look at your business more thoroughly.

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M&A Attorney and Personal Attorney

An M&A attorney specializes in negotiating, reviewing, and revising contracts for selling your business, maximizing value for the sale of your business. A personal attorney focuses on protecting your individual interests, such as estate planning or personal liability, during the sale. While one attorney or firm can handle both, many business owners prefer hiring a separate personal attorney to provide an additional layer of protection beyond the business transaction.

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Financial Advisor/Wealth Manager

To maximize your savings, taxes, estate, etc. it's highly recommended to engage with a financial advisor or wealth manager who can help plan your finances after an exit. An advisor can also help plan for taxes and help you with financial instruments to reduce your tax liability post-sale.

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Strategy or Management Consultants

Strategy or management consultants play a role in preparing your business for a successful sale. They specialize in optimizing operations, identifying weaknesses, and enhancing your business's strengths to maximize value. While not always required, their objective, third-party insights can provide a fresh perspective and uncover opportunities to position your business more attractively to potential buyers.

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Business Valuation Expert

Provides an objective valuation of your business, helping identify areas for improvement. Some investment banks and accounting firms have a valuation unit.

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HR Consultant

HR consultants can help develop transition plans for employees, and help achieve your strategic objectives in retaining key employees and leadership.

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In Closing

Planning your business exit is one of the most significant steps you'll take as an owner, and starting early can make all the difference. By assembling the right team of advisors — such as an M&A attorney, financial advisor, CPA, and investment banker — and following a structured timeline, you can maximize your business’s value and ensure a seamless transition. Whether you’re five years out or considering a quicker exit, having a methodical approach tailored to your unique needs is essential.

At Starkmont Financial, we’ve worked with countless businesses to navigate this complex process, connecting owners with trusted advisors and providing the guidance needed for success. Ready to start your journey? Contact us today to build your roadmap to a successful exit.

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