A Simple Guide to Exit Strategies
By Mejía & Associates
Your trusted partner in navigating successful business transitions
Why Plan Your Exit Strategy?
Whether you’re planning to retire, pivot to new ventures, or simply capitalize on the value you’ve built, preparing your business for sale is one of the most important decisions you'll ever make. At Mejía & Associates, we believe that a smart, well-timed exit isn’t just about walking away — it’s about maximizing your legacy, financial return, and peace of mind.
This guide provides key hint points to help you plan ahead, prepare strategically, and explore all your available options.
TIP 1 – Business Valuations: A Dynamic Process
Valuing a business is crucial for business owners, buyers, and investors, but it's essential to understand that valuations are not an exact science. Instead, they provide guidance on what a business is worth based on specific factors at a given time.
Here are three key characteristics of a valuation: your business value
Purpose Matters
The valuation method and outcome largely depend on the purpose of the valuation. Are you selling the business? Seeking financing? Planning for taxes or legal matters? Each scenario may lead to different valuation approaches, such as market comparisons, income-based methods, or asset-based calculations.
Not a Fixed Price
A business valuation is not a fixed price tag—it's an estimate influenced by industry trends, market conditions, and specific circumstances. Buyers and sellers may interpret the same valuation differently based on their perspectives, motivations, and risk tolerance.
Timing is Key
A valuation is only valid for the moment it is conducted. Economic shifts, changes in industry conditions, or even internal business performance can significantly alter a company's worth. What's true today may not hold six months from now.
Understanding that business valuation is a fluid and situational process can help business owners and investors make informed decisions. Rather than viewing a valuation as an absolute figure, it should be seen as a starting point for negotiations and strategic planning.
TIP 2 – Financial Preparation Before Selling
Proper financial preparation can make a big difference in valuation and buyer confidence if you’re considering selling your business. Here are three simple tips to get ready:
Organize Your Financial Statements
Ensure your balance sheets, income statements, and tax returns are accurate and current. Buyers want transparency and clarity.
Reduce Unnecessary Expenses
Streamlining costs and improving profitability before a sale makes your business more attractive and valuable.
Understand Tax Implications
How you structure your sale (asset vs. stock sale) can have significant tax consequences. Consult a tax expert to minimize liabilities and maximize your gains.
A well-prepared business sells faster and at a better price. Start now!
Your Business is Your Legacy—Sell It on Your Terms
TIP 3 – Operational Readiness: Get Your Business Ready to Sell
Preparing your business for a successful sale starts long before you list it on the market. A well-structured and efficient operation can increase valuation and attract serious buyers. Focus on these key aspects of operational readiness:
Strengthen Your Management Team
Build a capable leadership team that can run the business independently. Buyers want a strong team in place to ensure smooth transitions
Reduce Owner Dependence
If the business relies too much on you, it could be seen as a risky investment. Delegate responsibilities and create a scalable operation.
Standardize Processes & Documentation
Well-documented procedures, financial records, and operational workflows increase credibility and make due diligence easier for buyers.
Taking these steps ahead of time will position your business for a faster and more profitable sale!
Selling Smart: Start Preparing Today!
TIP 4 – Understanding Buyer Types: Who’s the Right Fit?
Not all buyers have the same goals. Recognizing their intentions can help you negotiate better deals. Are you considering selling? Planning ahead will help you maximize your business’s value and attract the right buyer!
Strategic Buyers
Typically, industry players looking to expand, acquire customers, or gain a competitive edge. They may pay a premium if your business complements theirs.
Financial Buyers
Private equity firms, investors, or family offices looking for solid returns. They focus on growth potential and profitability rather than operational synergies.
Individual Buyers (Owner-Operators)
Entrepreneurs looking to buy a business instead of starting one from scratch.
Competitors
Businesses in the same space looking to eliminate competition or expand market share. They might offer a quicker close but could pose risks related to confidentiality.
Pro Tip
Tailor your sales strategy based on the type of buyer you’re dealing with. Strategic buyers may pay more for synergies, while financial buyers may focus on cash flow and ROI.
Are you considering selling? Planning ahead will help you maximize your business’s value and attract the right buyer!
TIP 5 – Know Your Deal Structures Before You Sell
When selling your business, the deal structure can impact everything—from taxes and risk to your final payout and future involvement. That's why it's essential to familiarize yourself with the key terms and deal types before entering negotiations.
Here are some of the most common deal structures in lower and middle-market M&A:
Asset Sale
The buyer acquires selected assets and liabilities. Common in smaller deals; often tax-efficient for the buyer.
Stock Sale
The buyer purchases shares or equity interests, assuming all assets and liabilities. Simpler for the seller, especially with licenses or contracts in place.
Seller Financing
The seller finances a portion of the sale, often through a promissory note. Builds trust and helps close funding gaps.
Earnout
Part of the purchase price is tied to future performance. Useful when there's uncertainty or disagreement on valuation.
Holdback / Escrow
A portion of the sale price is held temporarily to cover potential post-closing issues.
Leveraged Buyout (LBO)
The buyer uses borrowed funds to finance the acquisition, often secured by the business itself.
SBA-Backed Deals
Especially in the U.S., SBA loans help fund acquisitions with favorable terms for buyers and lower upfront risk
Pro Tip
Educated sellers are empowered sellers.
Understanding these structures early will help you negotiate smarter and avoid surprises at the closing table.
TIP 6 – Legal & Compliance Readiness
Before going to market, make sure your legal house is in order. Buyers will dig deep—so should you.
Regulatory Compliance:
Ensure all licenses, permits, and regulatory filings are current. Any red flags can slow down or derail a deal. Clean compliance signals a well-run operation.
Intellectual Property Protection:
Secure your trademarks, copyrights, patents, and trade secrets. Confirm ownership is clear and properly documented—especially if third parties were involved in development.
Review Key Contracts:
Gather and organize all material contracts with customers, suppliers, employees, etc. Check for assignability and change-of-control clauses, and make sure everything is valid and up to date.
Check Legal Standing:
Assess your legal standing on a company and personal level. Be ready to respond to any buyer inquiries—whether you currently have or have had legal or compliance issues in the past. Transparency builds trust and helps prevent surprises during due diligence.
Being proactive reduces risk, builds buyer confidence, and helps you command the best value.
TIP 7 – Preparing Emotionally for Selling Your Business
Selling your business is a significant milestone, not just financially but emotionally. It’s essential to prepare for the psychological aspects of this transition to ensure a smooth and fulfilling journey into the next chapter of your life.
Letting Go of the Business
Your business likely represents years of hard work, dedication, and personal identity. Letting go can evoke feelings of loss and uncertainty. To navigate this:
Acknowledge Your Emotions:
Recognize that feelings of grief or anxiety are normal. Suppressing these emotions can lead to stress and regret.
Seek Support:
Engage with mentors, peers, or professional counselors who can provide guidance and perspective during this transition.
Gradual Transition:
Consider a phased exit strategy, allowing you to slowly detach and ensure the business continues to thrive under new leadership.
Life After the Sale:
Post-sale life can be both liberating and challenging. To prepare:
Define Your Next Chapter:
Identify activities, hobbies, or new ventures that can provide purpose and fulfillment.
Maintain Social Connections
Stay connected with your professional network, friends, and community to combat feelings of isolation.
Set New Goals:
Establish personal and professional goals to give direction and motivation in your post-business life.
Remember, selling your business is not just an end but the beginning of a new journey.
By preparing emotionally, you set the stage for a rewarding and purposeful future.
For more insights on navigating the emotional aspects of selling your business, consider exploring resources like Acquira’s guide on the psychology of selling a business.
TIP 8 – Valuing Main Street Businesses: 3 Common Approaches
Valuing a business involves more than just crunching numbers—it’s about selecting the right method based on the company’s nature, industry, and financial profile. Here are the three primary approaches and commonly used valuation models under each:
Income Approach
Capitalization of Earnings: Great for consistent cash flow
Discounted Cash Flow (DCF): Used for growth projections
Excess Earnings Method: Often used to value goodwill in small businesses
Market Approach
Compares recent sales of similar private businesses
Uses industry multiples like Price-to-Earnings or EV/EBITDA
Asset-Based Approach
Adjusted Book Value: Restates assets/liabilities to market value
Liquidation Value: Used in distressed or asset-heavy cases
Valuation is a guide, not a guarantee. Each business is unique—context matters!
Valuation is a guide — context and strategy matter.
TIP 9 – Bring in Equity Capital Without Giving It All Away
If you’re a business owner looking to scale fast — but not ready to walk away — there’s a powerful strategy you should consider:
Here’s how it works:
Sell a majority stake in your company to a strategic or financial partner who brings more than just money — they bring expertise, systems, and growth capital.
You retain a minority ownership position, typically 10%–40%, and stay actively involved.
Together, you set a 5+ year strategic growth plan to increase revenue, expand margins, enter new markets, and build infrastructure.
The goal? Double, triple, or even 5x the company’s value.
Then, after that growth period, you execute your second exit — selling your remaining shares at a significantly higher valuation.
This isn’t just a financial play — it’s a wealth-building strategy.
✅ You take money off the table now
✅ You stay involved in a business you believe in
✅ And you get a second, potentially bigger, payday down the road
Let's talk if you’re considering this path and want to explore how it could work for your business.
At Mejia & Associates, we help owners structure equity deals with the right partners to scale and win.
Why Mejía & Associates?
At Mejía & Associates, we go beyond transactions.
We strategize, structure, and guide you through every step of your exit-financial, legal, operational, and emotional.
With us, you gain:
✔️ Trusted advisors with deep M&A experience.
✔️ Strategic valuation and deal structure expertise.
✔️ Customized exit plans that meet your timeline and goals.
✔️ Access to vetted buyers and capital partners.
Your legacy matters. Let’s build your next chapter — together.