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“A business without an exit plan is a profitable hobby.”
That is the stark reality for many entrepreneurs, according to Chris Hallberg, CEO of Business Sergeant and a seasoned leadership coach.
For many founders, the thrill lies in the build, the late nights, the first sale, the rapid growth. But when it comes time to sell, the skills that built the business aren’t necessarily the ones that will get it sold for maximum value.
In a recent interview with Steve McGarry, Chris broke down the tactical aspects of exiting a business. From avoiding the “Fish and Chip” trap during due diligence to installing operating systems that double your multiple, here is how to prepare your business for a lucrative exit.
1. Don’t Rush the Exit (The “Expediency Tax”)
One of the most common mistakes founders make is waking up one day and deciding to sell immediately. Chris admits he made this exact mistake with his first major exit in 2011.
“It was super fast because I was super motivated to go do something else,” Chris explains. “I probably left a ton of money on the table for the expediency… I would say don’t do what I did. Be strategic and hang onto it for another six to nine months to get the right unit economics.”
The Fix: Treat your exit like a strategic initiative, not an impulsive decision. A proper exit strategy requires a 12 to 24-month runway. This gives you time to optimize unit economics, clean up the books, and demonstrate a trend line that makes buyers eager to pay a premium.
2. Eliminate Owner Dependency
When a buyer looks at your company, they are asking one fundamental question: What am I actually buying?
If the answer is “the founder’s charisma, Rolodex, and handshake,” the business has very little transferable value.
“If it’s you and your charisma… when you’re not there, who’s going to stay with the business?” asks Chris.
Buyers are paying for systems, a reputation, and a customer database, not a job that requires them to be you. To maximize value, you must make yourself redundant. Chris advises removing the owner from daily operations nine months to a year before the projected sale date.
3. Beware the “Fish and Chip” Model
You have a Letter of Intent (LOI) with a great valuation. You enter due diligence. Then, the price starts dropping.
Steve McGarry describes this as the “Fish and Chip” model: The buyer hooks you with a big valuation (the Fish), and then during due diligence, they chip away at the price using every minor issue they find.
“You think business is cutthroat? Wait until you get a deal on the table,” Chris warns. “The crazy stuff that happens in the last week of due diligence will make even the most wild business operator blush.”
How to fight back: The only defense against the “chip” is leverage. You need multiple horses in the race. If you have only one buyer, they have the power to chisel the price because they know you are emotionally committed to the sale. If you have three or four potential buyers, you can hold your ground.
“If someone starts acting crazy, just say, ‘We’re done. I’ve got three other people that aren’t trying this,'” Chris advises.
4. Install a Business Operating System (EOS)
How do you justify a higher multiple? You prove that the business is a machine that runs without friction.
Chris, an expert EOS (Entrepreneurial Operating System) Implementer, notes that simply having a recognized operating system can increase your multiple by 2x to 3x.
An operating system (like EOS) proves to the buyer that you have:
- Data: Weekly scorecards and clear KPIs.
- Process: documented workflows that don’t rely on tribal knowledge.
- Vision: A clear roadmap for who the company is and where it is going.
“They’re buying a system that operates,” Chris says. “Most businesses are bought cheap because they are unsophisticated… Why don’t you add the value [sophistication] and then sell it?”
5. Master the “Growth Capital” Narrative
One of the hardest parts of an exit is managing your team. If you announce you are selling, employees may panic and leave, damaging the value of the company before the deal closes. However, keeping secrets can destroy trust if the news leaks.
Chris suggests a middle ground: The Growth Capital Narrative.
If you are entering talks with buyers, tell your team you are exploring “growth capital.”
- It is truthful: You are looking for capital to take the business to the next level.
- It is flexible: That capital might come in the form of a minority investment, a strategic partnership, or a full buyout.
“At the very end, if you decide to give up 100%, that’s a last-minute decision,” Chris explains. This keeps the team focused on growth without the anxiety of an acquisition hanging over their heads.
The Bottom Line
You can spend five years building a business and sell it poorly, or you can spend those same five years and sell it magnificently. The difference isn’t the product—it’s the intent.
As Chris summarizes: “Strategy comes first, execution comes second.”
