“Five years? That’s way too long!” We hear this often when discussing exit planning. Many business owners envision a quick sale, a sudden windfall. However, a truly successful and maximised exit rarely happens overnight. At WrightCFO, we advocate for a five-year preparation window, and here’s why it’s not just a suggestion, but a necessity. And, importantly, how a Fractional CFO helps you navigate each phase.

Why Five Years?

A buyer isn’t just buying your current revenue; they’re investing in future potential. Five years allows you to demonstrate consistent growth, robust systems, and a sustainable business model.
This time frame gives you the opportunity to address any potential weaknesses within the business.
Clean, accurate financials are crucial. Five years allows for thorough audits, streamlining processes, and maximising profitability.
Buyers scrutinise historical data. You need time to create a compelling financial narrative.
Buyers look for businesses that can operate independently. This period allows you to document processes, build a strong management team, and reduce reliance on yourself.
This is the time to optimise your customer base, and remove any customer concentration risks.
Due diligence is intensive. Five years provides time to organise legal documents, contracts, and intellectual property.
This amount of time also allows for any legal issues to be resolved.
Exiting a business is emotional. Five years allows you to mentally prepare for the transition and define your post-exit goals.
This time also allows you to find and train your replacement if necessary.
The market fluctuates. Having a longer time frame allows you to be flexible, and sell when the market is at its peak.

The Five-Year Roadmap (and How WrightCFO Helps):

Year 1: Foundation and Assessment

This year is about laying the groundwork. You’ll need to conduct a comprehensive business valuation, identify key areas for improvement, and establish clear financial reporting. Begin documenting all processes. A Fractional CFO from WrightCFO can provide an objective valuation, identify key value drivers, implement robust financial systems, and help document financial processes.

Year 2: Operational Optimisation

Now, focus on streamlining operations, building a strong management team, and refining customer relationships. Begin addressing any legal issues. Our finance professionals can analyse operational costs, provide financial insights to support management decisions, and analyse customer profitability.

Year 3: Financial Refinement

Maximise profitability and cash flow, and prepare for due diligence by organising financial documents. Consider a quality of earnings report. We can implement strategies to improve profitability, create a comprehensive data room, and manage the preparation of a quality of earnings report.

Year 4: Legal and Due Diligence Prep

Review and update legal contracts, organise intellectual property, and prepare a comprehensive data room. Begin informing key team members of a potential exit. A Part-Time CFO can provide financial data to support legal reviews, help assess the financial impact of liabilities, and finalise the data room.

Year 5: Market Entry and Negotiation

Engage with investment bankers, prepare marketing materials, and negotiate the best possible deal. Prepare yourself and your family for the transition. We can provide financial due diligence material, develop financial presentations, and provide expertise during negotiations.

Exiting your business is a major milestone. By investing five years in preparation, and by utilising the expertise of the WrightCFO team, you’ll not only maximise your return but also ensure a smoother, less stressful transition.

Schedule a consultation with WrightCFO to discuss your exit strategy.

This article was originally published on LinkedIn here on 12th March, 2025.

5 Years to Freedom: Why Your Exit Strategy Needs Time