The Biggest Lie in Exit Planning - I Don't Need a Strategy Because I'm Not Selling Anytime Soon
The belief that exit planning can wait until you're ready to sell may be among the most expensive mistakes in business ownership. Learn why preparation isn't about timing the sale - it's about building options.
Picture this scenario: A business owner generating $180,000 in discretionary income. Lifestyle fully funded. Operations humming along. Everything looks stable, sustainable, successful.
Now introduce a single variable: What happens if that income disappears tomorrow through circumstances entirely outside the owner’s control?
A heart attack. A contentious divorce. A key partner demanding a buyout. In each scenario, the owner who believed exit planning could wait suddenly discovers they needed it years ago—and the price of that miscalculation can reach six figures in destroyed value.
The phrase “I’m not selling anytime soon” may be among the most expensive beliefs in business ownership.
The Psychology of Deferral
Understanding why owners delay exit planning requires examining the psychological forces beneath conscious decision-making.
Exit planning demands confrontation with uncomfortable realities: mortality, identity loss, diminished authority, the eventual end of something built over decades. Human psychology predictably favors avoidance of emotionally charged future states. Owners conflate “not selling soon” with “not needing to prepare.”
This conflation reveals itself in predictable patterns. The owner who insists they’ll “work until they drop” is avoiding the question of what happens if they can’t work. The founder who dismisses succession planning as premature is protecting their sense of irreplaceability.
Transaction data illustrates the challenge: roughly 70-80% of businesses that actively list for sale fail to transact, according to Exit Planning Institute research. (It’s worth noting that EPI provides exit planning certifications and services.) The Pepperdine Private Capital Markets Report corroborates this pattern, showing deal termination rates of 29% for investment banker-represented transactions and 43% for broker-listed businesses. The primary drivers include unrealistic price expectations—accounting for nearly half of failed deals—owner dependency, and poor financial documentation. These are issues that multi-year preparation can address.
The Category Error That Costs Millions
The belief that exit planning only matters when exit is imminent represents a fundamental category error—a confusion between two entirely different concepts.
Exit planning is not retirement planning.
Retirement planning answers: “When do I want to stop working, and will I have enough money?” Exit planning answers a far more strategic question: “Is my business structured to provide options regardless of when or why I need them?”
A business prepared for exit is not a business whose owner is ready to leave. It is simply a better-run business—one with documented systems, transferable relationships, financial clarity, and reduced owner dependency. These characteristics serve the owner whether they sell in two years or twenty, whether they exit voluntarily or are forced out by circumstances beyond their control.
The owner who builds exit readiness simultaneously achieves outcomes unrelated to selling: increased profitability through systematized operations, reduced stress through delegated responsibilities, improved resilience through documented processes, and enhanced borrowing capacity through clean financials.
Exit strategy, properly understood, is business strategy.
The Asymmetric Risk Calculation
Consider the expected value calculation business owners implicitly make when choosing whether to prioritize exit preparation.
Preparing early carries identifiable costs. Advisory fees typically range from $30,000 to $75,000 over several years. Add legal and tax structuring ($10,000-$30,000), valuation work ($10,000-$25,000), and implementation costs for systems and processes ($25,000-$100,000). The often-overlooked component is owner time—100 to 200 hours annually over 3-5 years, representing $45,000 to $150,000 in opportunity cost for owners billing $150-$300 per hour.
Total realistic investment: $120,000 to $300,000 when accounting for all direct and indirect costs.
Not preparing carries a different risk profile. The costs materialize only under specific conditions—death, disability, divorce, partnership disputes, or market disruption—but when they do, the destruction is significant. According to Grant Thornton’s restructuring practice and professional valuation literature, distressed sale discounts typically range from 20-40% below fair market value. For a business worth $2 million under normal conditions, that represents $400,000 to $800,000 in reduced proceeds.
The mathematics still favor preparation for many owners, but the calculus isn’t universal. For owners over 65, those with businesses valued below 3x EBITDA, or those facing health concerns, immediate sale may be superior to multi-year exit planning. For businesses with terminal multiples below 3x, the cost of transformation may exceed the value uplift.
The question isn’t whether to prepare—it’s whether your specific situation warrants multi-year preparation or a different strategy entirely.
The Strategic Reframe
For owners who are good candidates for exit planning—those with 5+ year runways, businesses valued above 4x EBITDA, and genuine capacity for multi-year transformation—the insight that separates the successful from the frustrated is this: every decision that prepares a business for exit simultaneously improves its current performance.
Consider what exit readiness actually requires. Documented systems mean operations continue without heroic individual effort. Diversified customer relationships mean revenue isn’t hostage to a single account. Clean financial records mean better decision-making data. Reduced owner dependency means the owner can take vacations without the business suffering.
These aren’t exit characteristics—they’re characteristics of well-run businesses. The owner who builds them isn’t preparing to leave; they’re building an enterprise that functions as an asset rather than a job.
The absentee owner test—“Could your business run without you for three months?"—isn’t a test of whether you’re ready to sell. It’s a test of whether you own a business or merely occupy an exhausting position you can’t escape.
The owner who passes that test has options: sell at an optimal moment, scale and step back for passive income, transition to employees or family, or simply continue operating with dramatically less stress.
The owner who fails that test still has options—they’re simply different ones. Immediate sale (even at a lower multiple), cash harvesting over time, finding a successor buyer who values their continued involvement, or structured wind-down. The worst outcome isn’t a lower sale price; it’s paralysis born from believing there’s only one acceptable path.
When This Advice Doesn’t Apply
Intellectual honesty requires acknowledging that exit planning isn’t universally optimal.
Consider immediate sale if:
- You’re over 65 with declining energy for multi-year projects
- Industry consolidation is creating premium multiples that may not persist
- A key customer or contract is at risk
- Your business has untransformable owner dependency
- Health concerns create timeline uncertainty
Consider cash harvesting if:
- Your business would sell for less than 3x EBITDA
- You enjoy the work and have adequate retirement savings outside the business
- The annual cash flow yield exceeds what you’d earn on invested sale proceeds
- The business isn’t transferable, but it reliably generates income
Proceed with exit planning if:
- You have a 5+ year runway before needing liquidity
- Your business can realistically command 4x+ EBITDA
- You have capacity (time and energy) for multi-year transformation
- Reducing owner dependency is achievable, not aspirational
What This Means for Your Business
The question isn’t whether you plan to sell soon. The question is whether your business is structured to give you choices when circumstances—voluntary or involuntary—demand them.
Building that structure requires honest self-assessment. Not every business should undergo multi-year exit preparation. Some should sell now. Some should harvest cash. Some need to confront the uncomfortable reality that they’re not businesses at all—they’re jobs with overhead.
The owners who capture full value at exit are rarely those who started preparing when they were ready to sell. They’re the ones who built transferable businesses years earlier—or who had the wisdom to recognize when a different strategy was warranted.
“I’m not selling anytime soon” may be true. But it answers the wrong question—and mistaking it for a strategy is an error that compounds over time.