Exit Planning for Indianapolis Business Owners

Why Plan an Exit Before You Sell

Buyers look back at your last three years of results. Whatever those years show is what they'll pay for. If you start fixing things the month you list, the numbers won't have time to reflect it.

An exit plan works backward from the day you want to be done. It sets a target, lists what holds the price down today and puts each fix on a calendar.

It also gives you options. Owners with a plan can sell when the market is good instead of when they're tired, sick or out of patience.

Three Years Out: Get the Books Buyer-Ready

Clean financials are the single biggest thing you control. A buyer's lender will compare your profit and loss statements to your tax returns line by line.

• Move to accrual accounting if you're still on cash, or at least have your CPA prepare accrual statements
• Separate personal spending from the business, or track it clearly as an add-back
• Run all revenue through the books, since unreported cash can't be counted toward price
• Keep monthly statements closed on time, not caught up at year end

Owners who do this early often find their real earnings are higher than they thought. That's money a buyer will pay a multiple on.

Two Years Out: Make Yourself Less Necessary

The most common reason buyers lower an offer is that the owner is the business. If you quote every job, hold every key account and fix every problem, a buyer sees risk.

Start handing off pieces now. Promote a lead into a manager role, write down how jobs get priced and introduce your top customers to someone besides you.

The goal isn't to disappear. It's to show a buyer that the company keeps running for a few weeks without your phone ringing.

Spread Out Your Customers

If one customer brings in a large share of revenue, buyers worry about what happens if that account leaves after closing. Lenders worry about it too.

Two years is enough time to grow other accounts, sign longer agreements with the big ones or both. Even a modest shift in the mix can make an offer stronger and easier to finance.

Build a Team That Stays

A buyer is paying for people as much as equipment. Turnover in the year before a sale raises questions you'd rather not answer.

• Review pay against the Indianapolis market for your key roles
• Consider retention bonuses tied to staying through a sale
• Put job descriptions and basic training notes in writing
• Make sure licenses and certifications aren't held only by you

One Year Out: Plan the Taxes

How a deal is structured can change what you keep as much as the price itself. That's a conversation to have with your CPA and attorney well before an offer arrives.

In an asset sale, the buyer and seller split the price among equipment, goodwill, non-compete and other classes. Per the IRS, both sides report that split on Form 8594, and each class can be taxed differently.

Your entity type, how long you've owned assets and whether you take part of the price over time all matter. Planning a year ahead leaves room to make changes that need time to take effect.

Indiana adds a timing step too. Taft Law notes that a Notice of Transfer in Bulk must reach the Department of Revenue 45 days before closing when most assets change hands.

Choose Your Succession Path

Not every exit is a sale to an outsider. Each path has different trade-offs on price, timing and how involved you stay.

• Sale to a third party: usually the highest price, with an individual, competitor or private equity buyer
• Family transfer: keeps the name in the family, but often means a lower price paid over time
• Management buyout: rewards loyal staff, typically funded with a lender and a seller note
• Employee stock ownership plan: a trust buys the company for employees, with its own costs and rules
• Partner buyout: one owner buys the other, ideally under a written buy-sell agreement

Knowing which path you want early tells you what to work on. A management buyout needs a strong manager; a third-party sale needs clean books and a broad customer base.

Six Months Out: Tidy the Details

Small loose ends slow down due diligence. Check that your lease can be assigned, your contracts are signed and current, and your equipment list matches what's actually in the shop.

Fix the leaky roof, service the trucks and settle any open disputes. None of it adds much on its own, but together it tells a buyer the company has been well run.

Keep in mind the sale itself takes time once you list. Our guide on how long it takes to sell a business covers what to expect.

Know Your Number

An exit plan needs a target. Start with a business valuation so you know today's value, then measure progress against it each year.

Then compare that to what you need to retire or move on. The gap between the two tells you how hard to push and how long to wait.

Getting Started

Start with a free, confidential estimate through the valuation form, or call (317) 555-0186 to talk through timing.

When the plan is done and you're ready to go to market, see how a confidential business sale works in Indianapolis.