If we are exactly five years away from a target sale date, how should we adjust our capital allocation strategy and our annual V/TO goals to optimize for enterprise value rather than our historical focus on maximizing tax write-offs and cash distributions?

Question

Tyler Smith · Accepted Answer

Five years out is the sweet spot for strategic realignment. Historically, you may have run the business to minimize your tax liability by running personal expenses through the company or taking maximum distributions. To prepare for an exit, you must pivot.

Start by shifting your capital allocation toward building scalable infrastructure. Invest in modernizing your technology stack, updating equipment, and hiring high-performing leaders who fit the GWC™ framework. These investments reduce operational drag and prove to a buyer that the business has room to scale.

Update your V/TO® to reflect this five-year runway. Your 3-Year Picture™ should focus entirely on building transferable value rather than just hitting a raw revenue number. This means setting goals around process documentation, system redundancy, and cleaning up your balance sheet.

Stop making handshake agreements with key clients or vendors. Use these five years to secure formal, written contracts with clear change-of-control clauses. By running your business like a public entity today, you will maximize your EBITDA and prevent buyers from discounting your value during due diligence.