I am five years away from a target exit date and want to make sure I am doing the right things today. What operational shifts must I introduce now to ensure the company is highly sellable when the time comes?

Question

Tyler Smith · Accepted Answer

Five years is the optimal horizon because it gives you time to build a clean history of performance. If you wait until twelve months out, you are merely dressing up a pig. Your first shift is to build an Accountability Chart that completely excludes your name from any seat except Shareholder. To do this, you must systematically transition your daily operations to a strong leadership team who have the GWC, meaning they get it, want it, and have the capacity to do it.

You need to use your weekly Level 10 Meetings to test this team. Let them solve issues without your intervention using the IDS framework. This process takes at least two years to run smoothly. Next, use conative assessments like the Aptive Index to understand how your team takes action. If your current leaders lack a strong Follow Thru drive to organize and stabilize operations, you must recruit or realign individuals who naturally possess that drive.

Five years out also allows you to normalize your financials. Transition your accounting from cash to accrual basis. Run clean balance sheets and eliminate any owner-related personal expenses. Buyers want to see a minimum of three years of clean, audited, or reviewed financial history. If your books show irregular capital allocations or blurred lines between personal and business finances, a buyer will discount your multiples. By starting now, you allow the company to demonstrate a consistent track record of self-sustained growth, which is what buyers pay a premium for.