Many founders hope to build a company they can sell, pass on to a child, or transfer ownership to a trusted employee. However, many business owners are caught flatfooted when the day comes to exit.
In a recent Systems Simplified podcast episode, Adi Klevit of Business Success Consulting Group spoke with Swish Goswami, co-founder and former CEO of Surf, about the systems that helped him navigate a successful acquisition. Their conversation revealed a clear takeaway: a business with systems in place is easier to sell.
If you're considering a future exit - even if it's ten years from now - this checklist can help you put the right systems in place to make your company attractive to buyers, reduce deal friction, and maximize valuation. Even if you plan to transfer ownership to a child or trusted colleague, this checklist will help you make a clean exit.
Pre-Exit Checklist for Founders
1. Clarify Your Decision
Before anything else, get clear on your decision to sell. Uncertainty can stall progress, send mixed signals to buyers, and impede due diligence. Committing to the process is a vital first step for any business owner.
2. Organize Your Financials
Potential buyers will expect:
- Profit and loss statements
- Cash flow reports
- Balance sheets
- Tax returns for at least three years
Having clean, accurate financials shows that your business is well-managed and ready for transition. Build clear policies and systems for your accounting team to ensure transparent bookkeeping.
Clarity around your financials will also help in the short term as you continue to grow your business, evaluate what products or services provide the greatest ROI, and make decisions that affect your company's long-term financial health.
3. Build a Centralized Data Room
Create a secure and organized repository for documents related to your business operations, along with policies and systems that define how employees should maintain this repository. This depository should include the following documentation:
- Corporate formation documents
- Intellectual property filings
- Client contracts
- Vendor agreements
- Employment and contractor records
Systematizing your internal documentation helps accelerate due diligence when you sell or otherwise exit your company. In the short term, this eases the way for your operations team and makes acquiring and serving your clients that much easier.
4. Document Your Core Processes
Your company must be able to run without you for you to make a clean exit. The swiftest way to accomplish this goal is to document your SOPs (standard operating procedures) and your business processes. Establishing your business systems and ensuring they are put into practice allows you to step back and manage from a big-picture level or exit altogether.
5. Identify and Track KPIs
What metrics show your business is thriving? Whether it’s user growth, client retention, or recurring revenue, document your key performance indicators and keep them updated at a predetermined cadence. The most common cadence for management is weekly and monthly, but it is also essential to document quarterly and annual KPIs to show business buyers your growth year-over-year.
6. Secure Your Team Structure
Who will carry the torch if you plan to make a complete exit post-acquisition? Establish clear roles, responsibilities, and training systems now to ensure future continuity.
7. Prepare a Transition Strategy
A smooth handoff increases buyer confidence. Define a plan that includes:
- A training timeline
- Access to key systems and contacts
- Optional advisory support post-sale
8. Keep Momentum Going
The above steps will help your business show an accurate valuation during the acquisition process, and support continued growth. Establishing policies, processes, and procedures will provide an excellent foundation to support exponential growth, automation, and a continued revenue increase. Showcasing this continual growth is a fantastic way to attract buyers and set your business up for a smooth transition.
Systems Simplify the Sell
Every successful acquisition is built on clarity, consistency, and preparation. Systems enable all three. When your company runs on repeatable processes, you reduce dependency on any individual, including yourself.
Whether you plan to sell next year or in five years, it's never too early to start laying the groundwork.
Reach out to the experts at Business Success Consulting Group for support as you document and implement policies and business systems that will prepare your company to run independently.
