When to start planning your exit (about three years before you think)

Most owners start planning about six months before they want out. The work that changes the outcome takes two to three years.

That gap is the whole problem, and it is not caused by procrastination. It is caused by a reasonable assumption: that you will choose when you leave, so you can start when you decide to.

The planning frameworks that advisers use say otherwise, and they say it in a way worth knowing.

What are the 5 Ds of exit planning?

Death, disability, divorce, distress and disagreement. They are the five events that most commonly force an unplanned exit, and they sit behind most exit planning frameworks including the one used by the Exit Planning Institute (Cadence Wealth Partners).

Read that list again with your own business in mind. Not one of them arrives on a date you picked. Not one of them waits while you tidy the financials.

That is the argument for starting early, and it is arithmetic rather than alarm. If four of the five most common exit triggers are unplanned, then a plan that only works for the planned one covers a minority of outcomes.

Why does it take longer than owners expect?

Three things run on their own clock and none can be rushed.

Evidence takes time to accumulate. The strongest thing you can show a buyer or a successor is a period during which the business performed without you at the centre. You cannot produce that in a quarter. It either happened or it did not.

Untangling has long lead times. Licences held personally, guarantees you have signed, intellectual property in your name, supplier terms built on a relationship. business.gov.au notes licence transfers alone can take up to 12 months (business.gov.au).

Structure decisions have to be made in advance. How the business is owned affects the tax outcome, and restructuring close to a sale is often ineffective or creates its own problems. That conversation with your accountant is useful two years out and largely academic two months out.

Add the sale process itself, roughly six to nine months from listing to settlement, and a realistic timeline runs to three years from first serious thought to money in the bank.

What is a 5 year exit strategy, and is 3 years enough?

The distinction between short and long timelines is well described. A one-year approach focuses on getting sale-ready quickly with limited time to address valuation gaps. A five-year approach gives runway to build leadership depth, stabilise financials, reduce owner dependency and negotiate from a position of strength (Renegade).

Three years sits close enough to the second of those to get most of the benefit. Beyond three, the returns flatten for most owner-led businesses of this size, because the work is finite: move the decisions, hold the relationships in the business, prove it runs. Five years is not twice as good as three. It is three years of work and two years of maintaining it.

Under two years, you are choosing which gaps to fix rather than fixing them.

The two windows when owners think about this

There is a pattern worth naming, because recognising it is often what turns thinking into acting.

Owners tend to seriously consider stepping back in two windows a year. Late in the calendar year, when the year is ending and the same problems are still there. And around the start of the new financial year, when the numbers land and the effort of the past twelve months turns into a figure.

Both windows produce the same thought, which is some version of "I cannot do another one of these." Then the next quarter starts, the business absorbs the attention, and the thought goes away until the following cycle.

Nothing is wrong with that. It is what happens when the only time you have to think about the business is the time you are also running it. But it means the decision to start often gets deferred by a full year at a time, and those are the years that were supposed to do the work.

If you are in one of those windows now, the useful move is not deciding whether to sell. It is starting the work that makes selling a choice, because that work is the same either way.

What should an exit plan include?

At minimum, five things.

The trigger and the timeline, including what happens if the trigger arrives unplanned.

The current position, honestly assessed. How much of the business depends on you, what the financials look like to an outsider, and where the personal attachments are.

The gap, meaning the distance between where the business is and where it needs to be to transfer.

The sequence, because the items are not equal. Untangling first, since it has the longest lead times. Proof second, because it needs time to accumulate. our guide to preparing a business for sale sets this out quarter by quarter.

The route, whether that is a sale, a handover to family or staff, or staying with a business that no longer needs you. our guide to succession planning covers the handover version.

Notice that four of those five are the same regardless of which route you take. That is the argument for starting before you have decided.

What starting early makes possible

Choice, mostly.

An owner three years out can wait for a better market, decline a bad offer, structure the deal on their terms, and change their mind about selling altogether. An owner six months out has fewer of those options, and buyers can tell which one they are dealing with.

The other thing it makes possible is the option nobody discusses: keeping a business that no longer requires you to be there. That is a genuinely different outcome from either selling or staying stuck, and it only exists if the work was done. our guide to key person risk covers what that work is.

Frequently asked questions