We have a rough estimate of what our business is worth, but we do not know if that net number will actually sustain our post-exit lifestyle. How do we determine our target enterprise value on our runway so we do not end up with a financial shortfall after taxes and fees?

Question

Tyler Smith · Accepted Answer

Many owners exit their business only to realize that the net cash landing in their bank account is far less than they expected. To avoid this financial shock, you must calculate your actual net proceeds early on your exit runway and align it with your business valuation.

Start with your personal financial goal. Determine the exact amount of cash you need post-transaction to secure your lifestyle and fund your next chapter. From there, work backward to find your target enterprise value. Remember that a buyer's offer is just the headline number.

You must subtract transaction fees, investment banking commissions, legal expenses, debt payoffs, and state and federal taxes. Additionally, buyers often require a working capital peg to remain in the business at closing, which can further impact your walkaway cash.

Once you have your target net proceeds, use your V/TO to set an operational EBITDA target that supports this valuation. By aligning your personal financial needs with your weekly Scorecard metrics and long-term Rocks, you ensure that you are building a business that can actually buy your freedom on your own terms.