Why Most Exit Timelines Fail (And How to Build One That Works)

The average business sale takes 9-12 months, but most owners plan for 6. Here's why timeline misalignment kills deals and how to create a realistic exit roadmap.

The Timeline Illusion

When business owners first consider selling, they typically imagine a straightforward process: find a buyer, negotiate terms, close the deal. Three months, maybe six.

The reality is starkly different.

Our analysis of 200+ lower middle market transactions reveals that the average successful exit takes 11.4 months from initial preparation to closing—and that’s for deals that actually close. Failed transactions often consume 6-9 months before falling apart.

Why Timelines Expand

1. The Preparation Gap

Most owners underestimate what “being ready to sell” actually means. Financial statements need to be audited or reviewed. Customer contracts need to be assignable. Employment agreements need non-compete clauses.

Each of these items, individually simple, collectively requires 3-6 months of preparation work before you even go to market.

2. The Discovery Process

Buyers don’t just want to see your numbers—they want to understand your business. This means:

  • Management meetings (2-4 sessions minimum)
  • Site visits
  • Customer reference calls
  • Vendor relationship reviews
  • Technology and systems audits

Each discovery item requires scheduling, preparation, and follow-up. What looks like “a few meetings” on paper becomes 8-12 weeks of intensive activity.

3. The Negotiation Reality

Once a buyer is interested, the real work begins. Letter of Intent negotiations alone typically take 3-4 weeks. Then comes:

Phase Typical Duration
LOI negotiation 2-4 weeks
Due diligence 6-12 weeks
Purchase agreement drafting 4-6 weeks
Closing conditions 2-4 weeks

These phases overlap somewhat, but the total adds up faster than anyone expects.

Building a Realistic Timeline

Start 18 Months Out

The most successful exits we’ve seen share one characteristic: owners started preparing 18 months before they wanted to close. This provides buffer for:

  • Financial cleanup and optimization
  • Process documentation
  • Key employee retention planning
  • Customer concentration reduction
  • Market timing flexibility

Create Milestone Gates

Rather than working toward a single closing date, structure your timeline around milestone gates:

  1. Preparation Complete (Month 6): Financials clean, data room ready, advisory team in place
  2. Market Entry (Month 7): Beginning outreach to qualified buyers
  3. LOI Target (Month 10): Aim to have signed LOI
  4. Due Diligence Close (Month 14): Complete buyer’s information requests
  5. Closing (Month 16-18): Final negotiations and execution

Build in Contingency

Add 25% to every estimate. If you think due diligence will take 8 weeks, plan for 10. This isn’t pessimism—it’s realism based on hundreds of transactions.

The Cost of Rush

Owners who try to compress timelines pay for it in three ways:

  1. Lower valuations: Rushed processes signal desperation to buyers
  2. Worse terms: Less negotiating leverage when you need to close quickly
  3. Deal failure: Insufficient preparation leads to issues surfacing in due diligence

One client came to us wanting to close in 90 days. We showed them that their financial records alone would take 60 days to organize properly. They chose to wait, prepare properly, and ultimately achieved a 15% higher valuation than their initial rushed offers.

Next Steps

If you’re thinking about an exit in the next 2-3 years, now is the time to start building your timeline. The preparation you do today directly impacts the outcome you achieve tomorrow.

This analysis is based on Exit Ready Advisors’ proprietary transaction database covering 200+ lower middle market M&A transactions from 2020-2025.

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