01 Jan Common Exit Planning Mistakes and How to Avoid Them
Building a business is often a long-term marathon. Exiting that business, however, is a complex process that benefits from years of preparation. As we move into 2026, a growing number of retirement-age owners are bringing businesses to market, increasing competition and making buyers more selective.
Owners who plan early and avoid common exit planning mistakes are often better positioned to protect value and maintain flexibility. Those who delay preparation may face unnecessary pricing pressure, deal complications, or limited options at the negotiating table.
Mistake #1: Waiting Until Burnout to Start Planning
One of the most common exit planning errors is treating the process as reactive instead of strategic. Many owners wait until fatigue, health concerns, or an unsolicited offer force them to act.
The Risk
When planning begins under pressure, owners often make rushed decisions. This can limit buyer interest, reduce negotiating leverage, and lead to less favorable deal terms.
The Fix
Begin exit planning three to five years before your desired exit date. This timeframe allows for thoughtful financial cleanup, operational improvements, and coordination with professional advisors. Early planning does not commit you to selling, but it preserves optionality.
Mistake #2: Owner Dependency and the Hub-and-Spoke Model
A business that depends heavily on its founder is harder to transition. When the owner controls most decisions, maintains all key relationships, and serves as the operational hub, buyers see elevated risk.
The Risk
High key-person dependency can negatively affect valuation and deal structure. Buyers may require earnouts, extended transitions, or price concessions to offset perceived instability.
The Fix
Shift from day-to-day control to strategic oversight. Develop capable leadership, document core processes, and distribute customer relationships across the organization. The goal is to demonstrate that the business can operate effectively without constant owner involvement.
Mistake #3: Overestimating Market Value
Emotional attachment to a business is natural, but buyers rely on objective data. Informal benchmarks, outdated multiples, or anecdotal comparisons often create unrealistic expectations.
The Risk
Overpricing a business can discourage qualified buyers and cause a listing to linger. Extended time on the market may signal distress or hidden issues, further weakening negotiating position.
The Fix
Obtain a professional, market-aligned valuation early in the planning process. A realistic baseline helps identify any gap between current value and retirement goals, giving you time to address weaknesses and strengthen key value drivers.
Mistake #4: Overlooking Tax Planning Until It Is Too Late
The headline sale price is not the same as net proceeds. Many owners underestimate how taxes and deal structure affect what they ultimately keep.
The Risk
Without advance tax planning, owners may encounter unexpected liabilities tied to asset versus stock sales, allocation issues, or state and federal tax exposure. These surprises can materially reduce post-sale liquidity.
The Fix
Engage a qualified tax professional 12 to 24 months before a potential transaction. Early coordination allows for legal strategies that may help improve after-tax outcomes and align deal structure with personal goals.
Align Your Exit With Your Long-Term Goals
Exit planning is not just about completing a transaction. It is about aligning your business, finances, and personal objectives for the next phase of life. Avoiding common mistakes gives you greater control over timing, terms, and outcomes.
If you are considering a future exit, the following steps can help clarify your readiness:
- Audit your preparedness: Complete the Value Scorecard at https://mybizworth.com/value-scorecard to evaluate owner dependency and operational strength.
- Establish a baseline: Use the Business Valuation Calculator at https://mybizworth.com to gain a realistic view of current market value.
- Define your timeline: Schedule a Free 15-Minute Business Assessment at https://mybizworth.com/free-business-assessment to discuss a practical exit roadmap.
Disclaimer: This content is for general educational purposes only and should not be considered financial, legal, or tax advice. Outcomes vary based on individual circumstances, business fundamentals, and market conditions.