Exit Planning Three Years Out: What Actually Moves the Number
- Cameron DuPree
- Aug 19
- 2 min read
The most valuable work in a business sale is done before anyone knows the business is for sale. Owners who begin three years out routinely achieve outcomes owners who begin three months out cannot, and the difference is not negotiation skill.
Year one: make the earnings defensible
Separate personal spending from the business, or document it so cleanly that every add-back is provable with an invoice and a ledger line. Move related-party arrangements, especially rent paid to yourself, to market rates and paper them properly. Get statements prepared consistently, ideally by an outside accountant, and build the ability to show gross margin by service line, product, or job.
Then get a formal valuation. Not to sell, but to learn the number and, more importantly, which specific factors are suppressing it.
Year two: reduce dependence on you
The single largest value lever available to most owners. Hire or promote someone who runs daily operations. Transfer customer relationships from you personally to that person or a team. Document the processes that exist only in your head or your longest-tenured employee's.
The test is simple and worth applying honestly: could the business run well for ninety days without you? Until the answer is yes, buyers are pricing a job rather than a company, and financing it is harder.
Year two into three: fix the structural risks
Diversify customer concentration if one account dominates, even at some cost to near-term margin. Convert your largest relationships to contracts with real terms and reasonable notice periods. Address licensing held personally rather than by the entity. Resolve environmental, legal, or compliance questions proactively with counsel.
Year three: build the growth story and prepare the file
Buyers pay for the future, evidenced by the past. Three years of consistent growth is worth more than one exceptional year, so invest in levers that show durable momentum rather than a spike.
In parallel, assemble what a buyer will ask for: corporate records, contracts, leases, licenses, insurance history, equipment schedules, employee documentation. A data room that comes together in a week signals a well-run company. One that takes two months signals the opposite.
The economics of preparation
Because value at this level is a multiple of earnings, a dollar of durable earnings improvement is worth several dollars at closing, and a structural fix that moves the multiple itself is worth more still. No negotiating tactic available on the day an offer arrives competes with that.
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