The 3-Year Exit Runway: Legal Moves That Increase Value and Survive Due Diligence

You know, Kevin, what does getting ready to sell actually mean in practice?

Well, b- businesses that do sell and they're ready to sell often have things that are consistent between them.

One is that the revenue and the operations are contractually protected, meaning they're, they keep going.

There's a system in place for them, and that system means that the business actually runs without the owner.

Um, that's what we talk about in terms of being transferable, that systems in place make it keep going, and then everything really is documented and very explainable.

So if a new owner comes in to execute and run on this business, they can be successful because they see what needs to be done, how it's done, why it's done, and all of those things are part of a transferable system that makes the business very valuable.

And this isn't a fast process.

Why do owners need two to three years to prepare?

Yeah, people, people are surprised at the amount of time it takes, but if you think about, you know, the process of developing a strategy and then identifying issues with the business, implementing changes, evaluating the outcomes, seeing the results, you know, there, there's a little bit of a life cycle of this process.

And so affecting change within a business does take some time.

And so I would say the, the main reasons are, you know, when you're talking about contracts or, you know, different legal structures, that it does take time to identify issues with them, fix them, implement them.

Uh, same thing with employee changes.

You know, everybody who's working in a business, you know, they understand that making changes, sometimes it's difficult.

You wanna get feedback and then make better changes.

And then also, when you're talking about just structural cleanup in general, you can't really rush through those things.

You wanna do them well and diligently.

So y- those things, they just do take time, and then you actually sequence things.

Like, some things have to be done first, and then once they're done, we go on to the next order of things.

So all those pieces, when you look at them, you, you really are talking about a multi-year process to do it well.

You know, Kevin, what does getting ready to sell actually mean in practice?

Well, b- businesses that do sell and they're ready to sell often have things that are consistent between them.

One is that the revenue and the operations are contractually protected, meaning they're, they keep going.

There's a system in place for them, and that system means that the business actually runs without the owner.

Um, that's what we talk about in terms of being transferable, that systems in place make it keep going, and then everything really is documented and very explainable.

So if a new owner comes in to execute and run on this business, they can be successful because they see what needs to be done, how it's done, why it's done, and all of those things are part of a transferable system that makes the business very valuable.

And this isn't a fast process.

Why do owners need two to three years to prepare?

Yeah, people, people are surprised at the amount of time it takes, but if you think about, you know, the process of developing a strategy and then identifying issues with the business, implementing changes, evaluating the outcomes, seeing the results, you know, there, there's a little bit of a life cycle of this process.

And so affecting change within a business does take some time.

And so I would say the, the main reasons are, you know, when you're talking about contracts or, you know, different legal structures, that it does take time to identify issues with them, fix them, implement them.

Uh, same thing with employee changes.

You know, everybody who's working in a business, you know, they understand that making changes, sometimes it's difficult.

You wanna get feedback and then make better changes.

And then also, when you're talking about just structural cleanup in general, you can't really rush through those things.

You wanna do them well and diligently.

So y- those things, they just do take time, and then you actually sequence things.

Like, some things have to be done first, and then once they're done, we go on to the next order of things.

So all those pieces, when you look at them, you, you really are talking about a multi-year process to do it well.