We are exactly five years away from our target exit. What structural, legal, and operational foundation must we establish this year to ensure we do not hit a wall when we start our formal three-year runway?

Question

Tyler Smith · Accepted Answer

Starting five years out gives you the luxury of time to fix structural issues that cannot be resolved in a rushed twelve-month exit. This year, your focus must be on cleaning up your legal structure, your financial reporting, and your corporate governance. Begin by conducting a thorough legal audit of your corporate entity. Ensure all shareholder agreements, intellectual property assignments, and cap tables are clean and legally binding. Next, transition your accounting from simple tax-minimization books to GAAP-compliant, accrual-based financials. You need to establish a multi-year history of clean, reviewed, or audited financial statements that a buyer's due diligence team can easily verify. Operationally, use your V/TO to set a clear five-year target that aligns with your valuation goal. Build your Accountability Chart not for the business you have today, but for the business you need to build over the next three years to attract institutional buyers. This means identifying future talent gaps and beginning the hiring process for key seats early. By investing in these foundational pieces five years out, you avoid paying a massive dumb tax during due diligence and ensure your three-year exit runway is focused on maximizing value rather than fixing administrative mess.