Exit planning
Are You Ready to Exit Your Business? Value, Motives and Records
Three tests that show whether you are ready to exit: a realistic value, a real reason to sell, and records a buyer can verify.
By Michael D. Rubin, CEO & Founder · Updated September 2026 · 736 words
You are ready to exit when three things are true: you know what the market will realistically pay, you want to sell for reasons that will survive a long process, and your records are organized enough to hand a buyer on request. If any one is missing, fix it before going to market, because each gap tends to surface at the worst moment, after months of work.
Here is how to check each one, and what to do if one of them comes up short.
Test one: a realistic view of value
Most owners carry a number in their heads. Sometimes it comes from a friend's sale, sometimes from what retirement will cost, sometimes from the hours they have put in. Buyers pay for none of those. They pay for cash flow they believe will continue, adjusted for risk. For a company with $3 million to $100 million in revenue, that most often means three to seven times adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, corrected for one-time and owner-specific costs).
The distance between the number in your head and the market's number is often called the value gap, and it is a leading reason owners pull a company off the market. Close it on paper before you start. An outside business valuation, or a free opinion of value from an advisor, shows where you stand. Our answer on getting an honest opinion of value explains what a credible one looks like.
Test two: wanting to sell, and knowing why
Wanting out on a bad Monday is not the same as being ready to sell. A sale takes months, invites hard questions about your company and ends with you handing over something you built. Owners who have not thought it through often reach a signed letter of intent and then stall, which wastes time and can strain relationships with buyers and staff.
Ask yourself honestly: what will I do the week after closing? Can I live on the proceeds after taxes and debt? Am I comfortable with someone else leading my people? Talk it through with your spouse or partners as well, because their support matters when the process runs long. Unclear answers do not mean never; they mean the next step is planning rather than marketing. Buyers will also ask why you are selling, and a clear, credible reason, such as retirement or a new venture, reassures them.
Test three: records a buyer can verify
A serious buyer asks for documents early, and a slow or patchy response costs credibility and sometimes price. The core set is below; our answer on documents to organize before selling goes further.
| Document | Why the buyer wants it |
|---|---|
| Three years of income statements and balance sheets | To confirm earnings and the trend |
| Three years of federal tax returns | To check the books match what was reported |
| Year-to-date financial statements | To see that results are holding |
| Real estate and equipment leases | To confirm costs and whether terms transfer |
| Loans, liens and equipment financing | To know what gets paid off at closing |
| Fixed asset list and inventory estimate | To value what they are buying |
| Major customer and supplier contracts | To judge revenue stability and assignability |
| Franchise agreement, if there is one | To confirm transfer rights and approvals |
Assemble your team before you need it
An exit touches valuation, tax, law and negotiation, and no single person covers all of it. Most owners need a transaction attorney rather than only a general business lawyer, a CPA who understands how deals are taxed, a financial planner for the proceeds, and an M&A advisor to find buyers and run the negotiation. Bring them together early so the tax structure, the legal terms and the marketing plan are designed together instead of patched at the end. If your current attorney or CPA rarely handles company sales, an advisor can usually suggest professionals who do.
How we help owners test their readiness
MDR & Associates starts every relationship with a free, confidential discovery meeting and an opinion of value, given as a low-to-high range after we review three years of financials. That one meeting answers the value question and usually shows which records need work. If the company is ready, we take it to market; if it is not, we tell you what to fix first. Common questions are answered on our FAQ page, and you can contact us to set up the meeting.
Where this fitsExit planning for Texas business owners →
Questions owners ask next
What if the valuation comes in lower than I need?
You have three options: improve the company and sell later, adjust your plans, or sell part now and the rest later through a recapitalization. The weak option is going to market anyway and hoping. An advisor can show which improvements would move value most and how long they take to appear in the numbers.
Can I start the sale before my records are organized?
You can start preparing, but not marketing. Buyers form their view of a company in the first weeks, and a slow answer to a document request looks like a problem even when it is not. Most owners can assemble the core set within a few weeks with their CPA's help.