If we are five years out from an exit, how should we structure our yearly milestones so we stay on track?

Question

Tyler Smith · Accepted Answer

A five-year runway is the ideal timeline to engineer maximum enterprise value because it gives you time to fix structural deficiencies before a buyer uncovers them in due diligence. Break the five years into distinct operational phases.

Year one is about operational stability and baseline data. Implement EOS to get everyone aligned on the V/TO, build a functional Accountability Chart, and establish a weekly Level 10 Meeting rhythm. Identify the business valuation gap between what your company is currently worth and what you need net of taxes to fund your life after exit.

Year two focuses on leadership independence. Elevate your Integrator and transition every remaining operational hat off your own head. Delegate all primary customer, vendor, and banking relationships to seat holders who GWC their roles.

Year three centers on financial institutionalization. Upgrade from compiled financials to reviewed or audited statements. Commission a mock Quality of Earnings assessment to find accounting leaks and eliminate discretionary owner add-backs.

Year four targets commercial de-risking and documentation. Diversify client concentration, lock in recurring contracts, and ensure your core processes are documented and followed by all.

Year five is about transaction execution. Interview M&A advisors, assemble your deal team, run a competitive bidding process, and negotiate from a position of absolute operational strength.