Don’t Wait For A Major Event To Trigger Exit Planning

Most business owners know they will leave one day. Far fewer make a plan until the clock is already ticking, a health scare has happened, a buyer has appeared out of the blue or the market has turned. The trouble is that exits forced by circumstance often produce poorer outcomes, higher stress and far more risk. The better way is to build an exit plan long before you are ready to go. That does not mean putting the business up for sale tomorrow. It means deliberately shaping your company so it is always “exit ready”, with options.

At Dexterity Partners, we advise owners of UK businesses in the £1 million to £50 million revenue range through every stage of a sale, supported by our sister law firm 3Volution. Our view is simple. Exit planning is not a reaction to an event, it is a strategic discipline that compounds value over time.

Why waiting for a trigger rarely ends well

Many owners begin exit planning only when something big happens. Here is why that is a problem.

Market cycles are not on your timetable. When credit is tight or buyers are cautious, deal terms harden. Earn-outs become more common and price certainty falls, which can be painful if you need to exit quickly. In 2023, for example, a leading market study observed earn-outs in around one in five private deals, up from prior years as buyers sought ways to share risk. That tells you sentiment shifts, and quickly.

Tax and regulation change. Business Asset Disposal Relief remains available in the UK, with a £1 million lifetime limit for qualifying gains, yet this is a policy area that attracts regular scrutiny. Assuming the rules will be identical in two years’ time is a gamble. Good planning gives you the flexibility to time transactions and structure ownership well in advance. 

Succession is often unprepared. Research repeatedly finds a planning gap. One recent UK piece reported only 9 percent of businesses have succession fully integrated into strategy, while another survey highlighted that 69 percent of family business owners lack a documented succession plan. If you only start talking about successors when you want to sell your business, you have left it too late. 

Personal health and energy are unpredictable. No one plans for illness or burnout. But both are common catalysts. If the business depends on you, a rushed transition will be priced accordingly by buyers.

Key-customer or key-person risk is exposed in diligence. If a single contract, supplier or senior hire carries outsized risk, a buyer will either walk away or adjust the price and terms. That is difficult to fix under time pressure.

What “exit planning” actually means

Exit planning is not a one-off event. It is a series of choices that make your company more resilient, attractive and valuable, regardless of when you sell. Practically, it means:

• Clarifying likely exit routes, whether that is a trade sale, private equity, management buyout or an employee ownership trust.

• Building the numbers that buyers trust, including robust management accounts, clear EBITDA adjustments and consistent cash flow.

• Reducing concentration risks and owner dependency, so continuity does not rely on you.

• Cleaning up legal, commercial and compliance issues that would otherwise become red flags.

• Preparing a credible growth story, supported by data and evidence.

  The aim is control and choice. If you decide to sell next year, you are ready. If you decide to wait, you are better positioned and running a stronger business.

The compounding value of being “exit ready”

Owners often ask whether preparation genuinely pays in pounds and pence. While every deal is different, there are clear, practical advantages.

Fewer surprises, faster diligence, stronger price confidence. Pre-sale financial work such as a quality of earnings review can surface issues while you can still fix them, streamline diligence and improve buyer confidence. That often translates into firmer offers and less reliance on contingent terms.

Better negotiating leverage on mechanisms that affect what you actually receive. UK private deals frequently use locked-box pricing or completion accounts. Understanding which suits your business, and preparing financials accordingly, can protect value and reduce post-completion disputes.

Vendor due diligence reduces price chips. Independent sell-side work helps present a consistent fact base to all buyers and can reduce the risk of price reductions late in the process, when deal fatigue sets in.

Time expands your buyer universe. The earlier you think about your ideal buyer profile, the more time you have to build commercial relationships, demonstrate fit and reduce perceived integration risk.

Owner wellbeing improves. A planned exit replaces the anxiety of unknowns with a clear path. That alone is worth the early start.

How long does a UK business sale really take?

Plan for at least a year from serious preparation to completion, even when the business is in good shape. Some complete faster, others take longer, but a 6 to 18 month window is a sensible expectation. The owners who achieve the best outcomes are usually those who start preparing well before that timeline begins.

A practical 24 to 36 month roadmap

You do not need to do everything at once. The key is to start and to work methodically.

Months 0 to 6: take stock and set your north star

Define what a successful exit looks like to you. Price, legacy, employee outcomes, risk and timing all matter. Identify your likely route, whether a trade buyer, private equity, MBO or EOT. Document the current state across financials, legal, tax, customers, suppliers, operations and people. Establish a short list of value unlocks, for example recurring revenue, contract renewals, pricing discipline or product mix improvements. If your management accounts are not investor grade, commit to monthly reporting improvements and cash discipline now.

Months 6 to 12: professionalise the numbers and reduce key risks

Commission sell-side financial work proportionate to your size, for example a light quality of earnings review or a full vendor due diligence package. Map customer concentration and implement account plans that widen relationships. Shore up supplier resilience. Refresh pricing policies, discount governance and contract terms. Agree a normalised working capital methodology so you are not inventing it mid-deal. Strengthen board governance and document decision making.

Months 12 to 18: tighten legal and compliance, articulate the story

Resolve any shareholder, IP or contract anomalies. Standardise employment documentation, options and bonus plans. Ensure data protection, health and safety and sector-specific compliance are up to date. With the numbers and contracts in order, build your equity story, including a clear growth plan with initiatives, resources and evidence. Decide whether your business is better suited to locked-box or completion accounts and manage leakage controls or month-end processes accordingly.

Months 18 to 24: soft-market the business and warm the right buyers

Begin discreet buyer mapping. Identify strategic and sponsor buyers where there is a clear commercial fit, not just a bigger version of you. Track leadership changes and acquisition activity in those targets. Where appropriate, introduce the company to a small number of potential partners through industry events or commercial collaborations to reduce “first date” risk later. Continue to execute the plan and keep your data room materials current.

Months 24 to 36: launch a controlled process when the time is right

When your internal and external signals align, run a disciplined process. Prepare materials that answer the difficult questions upfront. Manage competitive tension, negotiate headline price and terms together, and protect momentum through diligence and documentation. If markets wobble, you are still a better business than you were two years ago, and you can wait.

The six stages of a well-run sale, integrated from the start

Dexterity Partners’ approach combines corporate finance advice and legal execution through our partnership with 3Volution. We weave the following stages into your day-to-day well before you launch.

1) Preparation. We make your numbers and narrative investor ready. That includes guidance on sell-side financial work, normalised EBITDA, working capital and KPIs.

2) Buyer identification. We build a research-led longlist and prioritise real strategic fit, including competitors and adjacencies, not a blast email to a generic list.

3) Marketing. We position the equity story to highlight synergies, growth opportunities and proof points, then manage buyer communications to preserve confidentiality and momentum.

4) Negotiation. Price and terms are negotiated together. We anticipate and shape pricing mechanisms and earn-out structures so you understand how and when cash is received. Recent data show earn-outs ebb and flow with market conditions, so how you frame risk matters.

5) Due diligence. We keep the process on the rails, bridging information gaps quickly. Vendor due diligence and quality of earnings work done early pays dividends here.

6) Completion. With 3Volution alongside us, legal drafting and negotiation are handled within the same joined-up team, so mechanics, warranties, indemnities and restrictive covenants align with the commercial deal you agreed.

This integrated model reduces friction, shortens timelines and protects value. It also keeps you focused on running the company while we run the transaction.

Common myths that hold owners back

“I will plan when a buyer appears.” That hands control to someone else. You are negotiating from a weaker position, and the timetable will be theirs, not yours.

“My accountant can tidy the numbers at the end.” Buyers want to see a track record, not a one-off spring clean. A quality of earnings review validates that track record and reduces the scope for late adjustments.

“Succession will sort itself out.” It rarely does. Many UK businesses have not even discussed succession inside the family or leadership team. Silence creates anxiety, and anxiety destroys value.

“I will save on fees by doing it myself.” A sale is not just about finding a buyer. It is about getting from interest to cash safely. The cost of one poorly drafted clause or a mis-set working capital target can dwarf advisory fees.

Owner dependency: why you must make yourself dispensible

Buyers apply a discount when the business depends on the owner. If customers buy from you personally, if key processes sit in your head, or if the team defers to you on every decision, your future involvement will be priced into the deal through deferred consideration, handcuffs or a lower multiple. Start now by:

• Promoting a clear second-tier leadership group and giving them real authority.

• Moving customer relationships to account teams.

• Documenting processes and building a rhythm of management reporting and reviews.

• Reducing the number of approvals that require you, then removing yourself from the day-to-day.

This does not diminish your legacy. It protects it.

Financial housekeeping buyers will expect to see

Early preparation allows you to tighten the metrics that drive value and avoid disputes.

Consistent, reconciled management accounts. Monthly P&L, balance sheet and cash flow, with explanations for variances.

Clear EBITDA adjustments. Non-recurring, owner-specific and growth investments should be identified and evidenced, so adjusted earnings are credible.

Working capital discipline. Buyers will set a target at completion. If your terms and collections are inconsistent, you risk leaving cash behind on the day you sell.

Revenue quality. Recurring revenue, contract lengths, churn, cohort behaviour and pricing governance all matter. Quality of earnings analysis tests these with a buyer’s lens.

Pricing mechanisms awareness. If you opt for a locked-box, manage leakage and interim covenants scrupulously. If completion accounts are likely, ensure month-end processes are robust to reduce post-completion friction.

Legal and compliance readiness saves weeks later

Deals stall when documents are missing, unclear or out of date. With 3Volution we help you address:

• Shareholder agreements, vesting and option schemes.

• IP assignments and chain of title.

• Key customer and supplier contracts, including change-of-control and termination provisions.

• Employment contracts, policies and HR files.

• Regulatory, data protection and sector-specific compliance.

• Property, leases and environmental liabilities.

Much of this is routine legal housekeeping. The earlier it is done, the less dramatic it becomes when lawyers are on the clock.

Tell a buyer-ready story, and prove it

A strong equity story is not marketing fluff. It is a coherent explanation of how the company grows from here, why a buyer is the right owner for the next phase and what resources and capabilities make it likely. Good stories are supported by data, for example cohort retention, win-loss analysis, margin by segment, and a clear plan to remove constraints. Preparation gives you time to generate that evidence through pilots, contracts and hiring.

When should you start?

Earlier than you think. Consider these simple triggers.

You are within three years of a likely exit. Start now. Most UK owners need at least 12 months for a well-run process and a prior year or two to get truly exit ready.

A significant customer is up for renewal. Use the renewal to improve terms, contract length and pricing. That will be valued far more if it is in place pre-sale.

There is leadership stretch. If you are struggling to take a holiday, you are unlikely to meet buyer tests on management depth.

Your sector is consolidating. Being proactive usually beats being the last one invited to the party.

Why this matters for the UK economy as well as for you

SMEs account for the majority of UK employment and over half of private sector turnover. Family-owned and owner-managed firms, in particular, are the backbone of many communities. The smoother these businesses transition to their next owners, the better for jobs and regional growth. That is another reason not to leave succession to chance.

Short case snapshots

The last-minute MBO that shrank. A profitable services company waited for a retirement-driven sale. When the owner finally engaged, the forecast relied heavily on him and two customers. Buyers offered a headline price that looked attractive but with a large earn-out over three years. The owner, keen to retire, accepted. Under pressure, he struggled to hit targets and the final proceeds were materially lower. A two-year runway building a second tier and diversifying revenue could have delivered more cash at completion.

The prepared trade sale that held its price. A manufacturer invested 18 months in inventory discipline, long-term supply contracts and a sell-side quality of earnings review. When diligence found the usual queries, responses were immediate and supported with analysis. Competing buyers stayed engaged, a locked-box was agreed and completion happened on time with no post-deal disputes.

Frequently asked questions

Isn’t exit planning only relevant once I have a firm timeline?
No. The actions that increase saleability and valuation overlap with what makes a good business. Start early and you keep your options open.

How early is early?
Two to three years is ideal. You can do a lot in twelve months, but a longer runway lets you build the record buyers pay for.

Do I need a quality of earnings review for a smaller deal?
For sub-£5 million EBITDA businesses, proportionate sell-side work still helps. It makes diligence easier and reduces the scope for last-minute chips.

Which pricing mechanism is better, locked-box or completion accounts?
It depends. Locked-box gives price certainty if your balance sheet is predictable and leakage can be controlled, while completion accounts suit businesses with moving parts at completion. Prepare early so either mechanism works for you.

Will buyers pay more if I professionalise the business?
While no adviser can promise a higher multiple, preparation improves buyer confidence, reduces perceived risk and can lead to firmer cash at completion rather than contingent structures such as earn-outs.

What if succession is within the family?
Document the plan and governance anyway. UK research indicates many families have not, creating avoidable risk for employees and lenders.

What about tax?
Speak to a UK tax adviser early. Rules change and eligibility for reliefs depends on ownership, roles and timing. Business Asset Disposal Relief currently offers a 10 percent rate on up to £1 million of qualifying lifetime gains, subject to conditions, but planning needs to begin years, not weeks, before a sale.

Your next step: become “exit ready” now

Book a confidential discovery call
Dexterity Partners leads the end-to-end process from preparation through to completion, with legal execution handled seamlessly by 3Volution. If you are within three years of a potential exit, or simply want options, we will help you create a plan that protects value and reduces stress.

Key takeaways

• Do not wait for a health scare, surprise buyer or tax change. Start now and compound value.

• Preparation improves price confidence, reduces reliance on earn-outs and shortens diligence.

• Succession is a strategic issue for UK businesses, yet many have no plan. Address it early.

• A 24 to 36 month runway lets you build the track record buyers pay for and gives you control over timing.

If you would like to discuss a tailored plan for your business, get in touch. We will help you move from someday to ready.