Our M&A advisor says we need a three to five year runway to prepare our business for sale, but we do not know what we should actually be doing differently during these years besides just trying to grow our revenue.

Question

Tyler Smith · Accepted Answer

A long exit runway is not about chasing reckless top-line growth. It is about systematically de-risking your business so a buyer can confidently pay a premium multiple. If you wait until you are ready to sell to start preparing, you will likely leave millions of dollars on the table or find yourself trapped in a lengthy post-close earnout.

During a three to five year runway, your focus must shift from operating the business to institutionalizing it. This means using your operating system to build a business that runs independently of you. You need to systematically identify and eliminate single points of failure, diversify your customer and supplier bases, and ensure your financial systems are institutional grade.

We recommend using the Step by Step Exit model to assess your exit readiness annually. Identify your operational vulnerabilities and turn them into quarterly Rocks. This long runway allows you to make strategic adjustments, like transitioning key accounts to your sales team and documenting your core processes, without disrupting daily execution. When you build an exit-ready business, you also build a high-quality business that is much easier to run today.