Jared Pilon
Most business owners, when asked when they plan to start their exit planning, give a similar answer: Five years before retirement. Maybe three. When an offer comes in. When things start to slow down.
In practice, those timelines are almost always too short. The improvements that matter most to a business's value and transferability take years to implement, not months. Understanding why can entirely change how you think about preparation and how successful your exit will be.
The Gap Between Where You Are and Where Buyers Need You to Be
Buyers evaluate a business through a very different lens than the owner who built it. Owners see effort, sacrifice, and history. Buyers see risk, systems, cash flow, and stability (or, in the worst case, instability). If a business runs primarily through the owner's personal relationships or daily involvement, that reliance becomes a liability in a buyer's eyes — even if the business is profitable.
That gap can be closed. But closing it takes time.
Five Exit Plan Areas That Require Years to Prepare
1. Corporate Structure and Tax Planning
In Canada, many business owners hope to access the Lifetime Capital Gains Exemption when they eventually sell their shares. Qualifying for that exemption is not always automatic. Balance sheets may need to be cleaned up. Passive assets may need to be repositioned. Share structures may need to be adjusted. These steps are all achievable, but they are rarely completed overnight. In many cases, planning needs to begin several years in advance to ensure eligibility is preserved.
2. Leadership Depth
If a business depends heavily on the owner for major decisions, key client relationships, and strategic direction, a transition becomes significantly more difficult, regardless of who the buyer is. Developing leadership depth means gradually delegating authority, allowing managers to make decisions, and enabling the organization to function well in the owner's absence. That process takes time, and it can be uncomfortable for those who have spent years as the central decision-maker. However, it is one of the most important steps in preparing a business for a future that doesn't depend entirely on one person.
3. Governance and Family Communication
For family businesses, questions around leadership and compensation eventually have to be addressed. Who will lead? Who will own shares? Will ownership be equal? How will compensation be structured? These conversations can be difficult, but delaying them rarely makes them easier. Delayed conversations allow assumptions to develop, and, over time, unmet assumptions can lead to conflict. Starting earlier creates space for reflection and adjustments before any of those assumptions harden into expectations.
4. Business Value and Transferability
Value is not simply what your business earns. It is also about how that value transfers to someone new. If key client relationships are tied to the owner, if processes are undocumented, or if financial reporting is unclear, the perceived value of the business can drop considerably. These factors can all be addressed. Client relationships can be transitioned gradually, processes documented, and reporting improved. These changes compound over time. The earlier they begin, the stronger the position at the table.
5. Personal Readiness
A dimension that is often underestimated is the personal side of a transition. For many business owners, their company has been a central part of their daily lives for decades. When that chapter closes, the shift can be significant. Beginning succession planning early provides time to reflect on what comes next, whether that is a limited advisory role, mentoring the next generation, or an entirely new direction. Succession planning prepares you for a meaningful transition in the owner's life.
A Useful Way to Assess Your Readiness Today
Rather than asking when you plan to exit, consider a more grounded question: if you needed to exit within five years, how prepared would the business be right now?
Would leadership be ready to operate without you? Would financial records be organized and clear? Would key relationships transfer smoothly? Would your corporate structure support a sale?
If your responses feel uncertain, that does not mean something is wrong. It means preparation has not started yet, and preparation is exactly what succession planning is designed to address.
Three Things Worth Keeping in Mind
1. Succession planning typically begins earlier than most owners expect.
2. The improvements with the greatest impact on value and transferability take time to build.
3. Starting early does not mean committing to an exit. It means building readiness so that when the time comes, the options are there.
Legacy Accounting LLP works with business owners across all stages of exit and succession planning. If you're unsure where to begin, a structured business succession planning ebook is available for download. It walks through the major components of a thoughtful succession plan and helps identify gaps in preparation.
Want to hear more on this topic? Listen to the Legacy Business Succession Podcast.
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