Talk to enough business owners who’ve been through a sale, and you start hearing a version of the same story. They knew the CGT concessions. They had the accountant across it, the broker on speed dial, and a rough number in mind based on what a friend down the road sold their business for. And they still walked out with less than they’d planned around. Sometimes a lot less.
The reason is almost never the deal structure. It’s what the business looked like when it went to market.
Most exit planning content is written by accountants and brokers, which is why it’s mostly about tax and paperwork. This one’s about the piece that determines the number itself.
Why Most Australian Businesses Don’t Sell for What the Owner Expects
Here’s the pattern Sean and the team see over and over. An owner in their late fifties or early sixties, twenty or thirty years into the business, decides they want out. The revenue is solid, the business has been profitable for years, and they’ve been told by someone the business should be worth roughly two or three times EBITDA.
Then they sit down with a broker or a corporate advisor, and the number that comes back is well short of the one they were planning around.
It’s almost always the same three or four reasons. The business relies on the owner personally in ways they’ve stopped noticing. A big chunk of the revenue is really the owner’s personal relationships, and a buyer knows those walk out the door with the sale. The financials look fine, but nobody can explain the margins clearly, so the buyer’s due diligence team has to assume the worst. And there’s no leadership layer under the owner, so the buyer is either paying for a business plus a hiring problem, or a business plus a two-year transition risk they’d rather not carry.
Buyers price all of that in. They don’t do it gently.
What Buyers Pay a Premium For
The businesses that sell at the top end of their industry multiple share a specific set of features, and none of them are about how clever the deal is.
- Revenue that doesn’t walk out with you: If half the top line is coming from relationships you personally hold, a buyer values that book of business at a fraction of what transferable, contracted, or repeat revenue is worth. The buyer’s assumption is that a chunk of it goes with you, no matter what the transition agreement says.
- Financials the buyer can trust on sight: Monthly management accounts. Gross margin broken out by product line, service, or segment. Cash flow forecasts a few months out. Clean, current, and consistent. If the P&L only exists after your accountant closes the quarter, and the numbers get “adjusted” every time it happens, the buyer’s team has to do a lot more work to underwrite the deal. They charge for that work in the price.
- A leadership layer that stays after you leave: A general manager, an operations lead, or a senior technical person who can run the business without you is one of the biggest single value drivers in a sale. The buyer isn’t just buying a business; they’re buying a business with management already in place. That’s a different asset.
- A believable next chapter: Not a hockey-stick forecast, which no one believes. A documented story about where the business is heading over the next three to five years, backed by pipeline, market position, and reasoning. Buyers are paying for future earnings, and they need to believe the future you’re describing enough to fund it.
- Low customer concentration: If one client is more than 20% of your revenue, buyers treat that revenue as at risk. Past 30%, some won’t proceed at all.
None of these are things you sort out in the six months before you sell. They’re built into the business over the years leading up to it.
The Four Pieces of Structural Work Behind a Good Exit
Getting a business from where most established Australian companies sit today to something a buyer will pay a premium for takes a piece of work that maps to four areas.
- The numbers: Get out of accountant-produced quarterly reports and into live management accounts. Gross margin by segment, cash flow projections, and any customer concentration issue visible on a single page. Everything else in the exit process runs on this.
- The team: Build the leadership layer, and give it enough runway to be credible in the buyer’s eyes. A general manager who’s been in the role for six months doesn’t count. Two years of them running most of the operational load is the minimum a serious buyer will value.
- Your role: By the time the business hits the market, you need to be doing meaningfully different work than you were three years earlier. If you’re still in daily operations when the buyer walks the floor, they know the business isn’t ready, and they price it that way.
- The direction: The story of where the business is going next has to be documented in a way that reads like a plan, not a pitch. This is where most owners underinvest, and it’s often where the gap between a fair price and a premium price sits.
The Personal Side Advisors Don’t Talk About
The part most exit planning conversations skip is the owner’s own readiness to leave. Which sounds soft, but it isn’t. It shapes the deal about as much as the numbers do.
Owners who’ve built a company over two or three decades have more of their identity wrapped up in the business than they’d like to admit. It’s where they’ve spent their best hours. It’s what they talk about at dinner parties. It’s how they know they’re contributing. When the sale finally happens, a lot of them find themselves lost within six months, and a good number end up starting or buying another business because they miss the work.
Which isn’t a reason to avoid an exit. It’s a reason to plan for what’s on the other side of one. What’s the thing that gets you out of bed on the Monday after settlement? What does your week look like? Who are you when you’re not the owner?
Owners who’ve thought this through tend to negotiate harder and cleaner. They’re not desperate to hold on, and they’re not desperate to leave. Both of those positions cost money at the table.
How Long Does Exit Planning Take
Most brokers and advisors will say three to five years, and there’s a reason the number’s consistent.
Year one is cleanup. Financials into a state a buyer can trust. Sorting the legal, tax, or contractual mess that’s built up over the years. Documenting the parts of the business that live in people’s heads and nowhere else.
Years two and three are the structural work. Building the leadership layer, transitioning customer relationships off you and onto the team, tightening pricing, and starting to document the growth story properly.
Year four is running the business hard for the numbers you want the buyer to be reading in the last two years of financials.
Year five is the sale process itself, which eats a lot more of your attention than most owners expect. Six to twelve months of it, on top of running the business.
You can still exit within three years if you have to. The number’s likely to be lower, and the flexibility on structure is thinner. With five years, you have options.
When to Start Thinking About Your Exit
Earlier than most owners do.
Owners who start thinking about the exit ten years out don’t usually end up exiting ten years out. What happens is they start running the business more like an asset than a job. They fix things they’d been putting off. They build systems they’d been meaning to build. They stop making decisions that only make sense if they’re running the business forever.
The business ends up worth more and easier to own at the same time, which is worth doing whether you sell or not.
What Moves the Needle
The businesses that sell well aren’t the ones with the cleverest tax structure. They’re the ones that have done the structural work to be worth what the owner wants for them, and the personal work for the owner to be able to walk away.
That’s the piece Sean and the team at Inner Circle work on with members thinking about their exit. Not the tax side. Accountants handle that. The structural readiness of the business, and the personal readiness of the owner, in the years before the sale.
If you’re inside five years of wanting to exit, or inside ten and want the business to be worth more whether you sell or not, the first conversation is worth having. Get in touch with Sean’s team.
Frequently Asked Questions
What’s the difference between exit planning and succession planning?
Succession planning is one type of exit planning, the type where the business passes to someone already inside it. A family member, a business partner, or someone from the management team. Exit planning is broader. It covers succession as one option, but also sale to an external buyer, sale to private equity, an employee buyout, or an orderly wind-down. The structural work sitting under all of them is largely the same. The tax and legal work is where they diverge.
How much of my sale price comes down to deal structure versus the business itself?
Most owners overestimate the deal structure and underestimate the business. A good structure might move the after-tax outcome by 10-20%. The condition of the business itself can easily move the pre-tax number by 50-100%, which means the years before the sale matter significantly more than the weeks during it.
Can I still sell my business if it relies on me?
Yes, but the buyer will price the reliance in, usually with an earn-out, where a big portion of your sale price is tied to the business performing well after you leave. You’re not walking out with a clean cheque; you’re staying tied to it for two or three more years while someone else runs it. Most owners who go through that experience wish they’d done the structural work earlier so they could have taken a cleaner exit.
