One of the biggest myths in entrepreneurship is that exits happen overnight. A great offer shows up, a handshake is made, and just like that—the business is sold.
But those of us who’ve lived through exits—or advised dozens of founders on how to prepare for one—know that’s not how it works.
The best exits are engineered. They’re designed with intention years in advance. They’re built, not stumbled into. And they’re almost never about one event—they’re about a mindset shift that turns a business from founder-reliant to scalable, transferable, and valuable in the eyes of a buyer.
At Legacy Advisors, we spend a lot of time working with founders who are three to five years away from a sale. That’s the sweet spot. It gives us the runway to clean up operations, build a leadership team, grow EBITDA, and position the company as a high-value target in the market.
If you’re even thinking about selling your company in the next few years, this article is your roadmap.
Why 3 to 5 Years Matters
Selling a business isn’t just about financials or timing the market. It’s about creating a business that someone else actually wants to own—and pay a premium for.
And that doesn’t happen in a quarter or two.
It takes time to:
- Build a leadership team that reduces founder dependence
- Clean up your books and optimize margins
- Lock in recurring revenue and reduce customer concentration
- Build SOPs and make operations turnkey
- Define what kind of exit you want—and what you need financially to get there
Trying to cram all that into 6–12 months is like deciding to run a marathon and starting to train the day before.
A 3–5 year forecast gives you time to make changes that move the needle—not just patch holes.
The Exit Horizon: Thinking Like a Steward
I’ve said this before on the Legacy Advisors Podcast, and I’ll say it again: you don’t really own your business. You rent it. You’re a steward for a chapter of its journey.
At some point, someone else will take the wheel. Your job is to make sure you’re handing over something better than what you inherited or created.
That’s what exit forecasting is all about. It’s about building legacy through intentionality.
Whether you’re looking to sell to a strategic acquirer, pass it on to family, or do a recap with private equity—your outcome is only as good as your preparation.
So how do you do it?
Step One: Define the Endgame
Before you can map the road, you need to know where you’re going.
This is where most founders stumble. They’re clear on how to build but vague on why or when to exit. And that ambiguity bleeds into every decision—who they hire, what markets they chase, how they structure the business.
Start by answering these questions:
- What’s your personal “walkaway” number (post-tax)?
- Do you want a full sale, a partial exit, or a second bite at the apple?
- Are you open to staying on post-sale, or do you want a clean break?
- Who do you see buying your company—a strategic, PE firm, family office, or internal successor?
- What kind of legacy do you want to leave behind?
Once you have a vision, you can reverse-engineer your decisions. That’s forecasting.
Step Two: Assess Your Current State
You can’t plan a journey unless you know your starting point. And most founders aren’t as ready as they think.
Ask yourself:
- How founder-dependent is the business today?
- Is your financial reporting investor-grade or just tax-prep?
- Do you have documented SOPs, KPIs, and dashboards?
- How diversified is your revenue (customers, products, geographies)?
- Is your cap table clean and well-structured?
If this makes you uncomfortable, good. That discomfort is fuel. A 3–5 year horizon gives you time to fix it.
Step Three: Build Transferable Value
Buyers don’t buy businesses—they buy outcomes. They buy cash flow, predictability, systems, and potential.
Here’s how to build that:
Strengthen Leadership
Your goal is to make yourself irrelevant. Build a team that can run the company without you. Identify gaps in leadership and start developing people now.
Buyers will pay more for a company that doesn’t rely on one person to function.
Recurring Revenue
Whatever your current model is, find ways to make your revenue more recurring. Monthly subscriptions, contracts, retainers—these reduce risk and increase valuation multiples.
Reduce Customer Concentration
If one customer makes up more than 20% of your revenue, it’s a red flag. Diversify. A well-balanced book of business is much more attractive to acquirers.
Clean Financials
Get an outside CPA to review your books. Switch to accrual accounting if you haven’t already. Make sure every line item is categorized properly.
Sloppy books are deal-killers.
Document Everything
Buyers want to know the business can scale. That means SOPs, playbooks, CRM records, training manuals, and performance dashboards.
If your knowledge is in your head, your value is trapped.
Step Four: Watch the Market
Even if you’re not ready to sell today, you should always be aware of your market.
- Who’s acquiring businesses in your space?
- What deals have been done recently—and at what multiples?
- Are competitors growing through acquisition?
- Is your sector consolidating, expanding, or fragmenting?
The more you understand the buyer landscape, the better you can position your business as a perfect fit when the time is right.
At Legacy Advisors, we keep our clients plugged into the market long before they go to market. That way, when the window opens—they’re ready.
Step Five: Align With Your Personal Timeline
Too many founders wait until they’re exhausted to start thinking about exit. That’s backwards.
The goal is to exit from a position of strength—mentally, physically, and financially.
Think about your life 3–5 years from now:
- Where do you want to be spending your time?
- What kind of work excites you?
- Do you want to retire, reinvest, or build something new?
- What impact do you want to make beyond the business?
If you don’t know what you’re walking into, it’s hard to walk away with clarity.
And deals fall apart when founders aren’t emotionally aligned with their decision.
Step Six: Engage the Right Advisors Early
This one’s non-negotiable.
If you wait until you have an LOI to find an M&A attorney, a tax strategist, or a valuation expert—you’re already behind.
Start building your advisory team at least 2–3 years in advance. The best advisors don’t just clean up your deal—they shape it. They help you prepare, negotiate, and position your company to maximize value and reduce friction.
At Legacy Advisors, we often begin advising clients long before they sell. That’s how we help them make smart, informed decisions—not panicked ones under a deadline.
Common Mistakes to Avoid
Even with the best intentions, founders make predictable mistakes when forecasting an exit.
Here’s what to watch out for:
Waiting Too Long
If you wait until you’re burned out, you’ve already lost leverage. Forecasting is about exiting before you have to—not after.
Misjudging Value
What you think your business is worth and what the market will pay aren’t always the same. Get a valuation early and update it annually.
Failing to Delegate
If the business still relies on you for every key decision, you don’t have a sellable company. You have a job with overhead.
Not Planning for Taxes
A great deal can turn into a financial disappointment if you don’t plan for tax implications. Get ahead of this with the right experts.
No Post-Exit Vision
A founder without a plan for what comes next is a founder who often delays, stalls, or regrets the exit. Create a personal game plan now.
The Mindset Shift
The founders who win in M&A aren’t the ones who chase exits. They’re the ones who build with the exit in mind.
They’re not reactive. They’re intentional.
They know that forecasting isn’t about setting a sale date. It’s about building a business that’s always ready—so when opportunity shows up, they can move fast, negotiate strong, and leave on their terms.
You don’t need to know everything today. You just need to commit to the process.
Start where you are. Get clear on the destination. And build your 3–5 year roadmap with the endgame in view.
Final Thought
Forecasting your exit is one of the smartest decisions you can make as a founder. Not because it guarantees a deal—but because it builds optionality, leverage, and clarity.
You’ll run a better company. You’ll sleep better at night. And when the time comes to hand over the keys, you’ll do it confidently—knowing you planned, prepared, and executed like a pro.
If you’re even thinking about exiting in the next 3 to 5 years, now is the time to start building the future you want.
We’re here to help.
Let’s build your exit roadmap—together.
Frequently Asked Questions: Forecasting an Exit 3 to 5 Years in Advance
Why is a 3 to 5 year timeline ideal for exit planning?
A 3 to 5 year window provides the time necessary to transform a good business into a sellable one—and a sellable business into a premium one. That timeline gives you the runway to clean up your financials, reduce owner dependency, build a capable leadership team, lock in recurring revenue, and strategically grow EBITDA. It also allows you to define your personal endgame and identify the right type of buyer. Waiting until you’re 12 months out typically results in reactive decisions, rushed processes, and weaker outcomes. The best exits aren’t about timing the market—they’re about preparing with purpose. That takes time—and this is the window that gives you real leverage.
What should I focus on first if I’m 3–5 years out from selling?
Start by defining your personal and financial goals. Get clear on what you want life to look like after the exit, and work backward from there. From a business standpoint, focus on areas that create transferable value: professionalizing your financials, reducing your business’s reliance on you personally, building a leadership bench, and documenting processes. You’ll also want to assess your customer concentration, revenue quality, and scalability. Essentially, anything that reduces buyer risk or increases their confidence should be a top priority. The earlier you focus on these pillars, the more time you’ll have to fix weaknesses and amplify strengths.
How do I know what kind of buyer I should prepare for?
It depends on your business model, growth profile, and personal goals. For instance, if you want a clean exit and your company has strong recurring revenue, a strategic buyer might pay a premium for synergies. If you’re open to staying involved and want to roll equity into a second bite at the apple, a private equity group could be a better fit. You may also have internal options like management or family transitions. The key is to identify your ideal exit scenario early and tailor your business to align with what that buyer will find most valuable. At Legacy Advisors, we help founders evaluate these buyer personas and align operations accordingly—years in advance.
What are the financial metrics I need to understand when forecasting an exit?
The most important financial metrics to monitor are EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), revenue growth, gross margins, customer concentration, and cash flow trends. Buyers use these metrics to gauge risk, assess scalability, and determine valuation multiples. Inaccurate or inconsistent reporting can tank a deal—or reduce your offer significantly. It’s also important to think about normalized financials—removing one-time expenses, adjusting owner compensation, and ensuring your financials reflect what a buyer would inherit. A 3–5 year window gives you time to optimize these metrics, prepare for due diligence, and start telling a compelling financial story that holds up under scrutiny.
What if my business isn’t ready yet—should I still forecast an exit?
Yes. In fact, the best time to forecast an exit is before you feel ready. That’s the whole point of giving yourself a 3 to 5 year horizon. You’re not expected to be perfect now—you’re expected to commit to the process. Many founders discover that once they start planning early, their business performance improves dramatically, even before they decide to sell. Why? Because clarity drives focus. When you start thinking like a future seller, you make smarter decisions, build stronger teams, and improve systems. Even if you end up pushing your timeline out, you’ll have built a stronger, more valuable company in the process—and that’s a win no matter what.