Planning Your Exit: How to Prepare Your Startup Now for a Successful Future Sale

For many entrepreneurs in the thick of growing their company, selling the business is often a distant afterthought. But founders who plan for this transition early often end up with stronger, more resilient companies, regardless of when (or if) they sell.

Colin Campbell, a serial entrepreneur who has built and exited more than 10 companies, says the No. 1 thing holding entrepreneurs back from a successful exit is themselves.

“If you want a clean exit, you need to detach who you are from the company,” he told CO—. 

Based on Campbell’s experience and insights from his book, “Start. Scale. Exit. Repeat.,” here’s how business owners can plan for their departure, long before it’s time to sell.

[Read more: How to Prepare Your Business for Sale] 

Understand your potential exit paths

Campbell outlined three common categories of startup exits for founders who plan to sell:

• Cash-flow buyers, often private equity firms, tend to value companies based on predictable earnings and risk. These buyers focus on financial performance, operating margins, and stability.
• Competitors may be willing to pay more than fair market value if buying your business helps them reduce expenses, consolidate market share, or streamline operations.
• Strategic buyers are the “ideal scenario,” according to Campbell. These buyers will make offers based on how acquiring your company might accelerate their own growth, whether through expanded distribution, customer overlap, intellectual property, or talent.

Understanding which exit path best aligns with your business model allows you to run your business today in a way that future buyers will find most appealing.

Keep an eye on external conditions that can impact your business valuation

The timing of a business sale can matter even more than operational performance, said Campbell. Getting the timing right means paying attention to external signals like economic conditions, investor sentiment, and industry trends, which can dramatically influence valuation.

Campbell highlighted the market conditions of 2021 as an example: Overheated markets for NFTs (non-fungible tokens), SPACs (special purpose acquisition companies), and meme stocks like GameStop led to speculative behavior and rising asset prices, which created an ideal environment for sellers in the e-commerce and consumer brand space.

“Many founders assumed the surge would continue, [but] when the market flipped in 2022, valuations for e-commerce and microbrands collapsed,” Campbell explained.

Campbell encourages founders to watch for signs of “froth in the market,” such as extreme valuations and unsustainable enthusiasm — and if you see those signs, it’s time to “quietly ‘exit stage left,’” he said.

Larger factors such as economic downturns, regulatory changes, and technological shifts can also quickly reshape an entrepreneur’s potential exit opportunities. Campbell learned this firsthand when his dot-com-era company’s stock plummeted in 2000, resulting in a massive financial loss.

“The world can flip overnight, [so] always get liquidity or control … if [you’re] selling,” he said.

[Read more: Selling a Business? What to Consider]

Delegate until the company can run without you

Campbell said one of the clearest signals of exit readiness is whether the company can function independently, without the founder making every decision or managing daily operations. This can be difficult for founders who view their business as an extension of themselves rather than the asset it is.

“When you’ve built a business, it’s easy to blur the line between your identity and your company,” Campbell said. “Once you see the business as an asset, … you can start positioning it for sale [by] bringing other people into critical roles, delegating leadership, and gradually stepping back from day-to-day operations.”

Campbell breaks this progression into stages, as outlined in his book:

• Start: Delegate tasks. In the early days of your business, you’re more hands-on and relying on instinct. Start empowering employees by handing off your smaller tasks.
• Scale: Delegate responsibilities. As you grow, you can start delegating bigger strategic responsibilities by hiring experienced leaders. Campbell advised bringing in people who “have the expertise, the right personality profile, and are comfortable in high-paced environments.”
• Exit: Delegate the company. When you think you’re ready to sell, step back completely from day-to-day responsibilities. Put systems, documentation, and leadership structures firmly in place so the company can operate independently. Buyers want companies that operate “like a Swiss clock,” not ones that rely on their founder for success, Campbell explained.

A business built on strong processes and capable leadership is more resilient, easier to scale, and more attractive to a wide range of buyers. Whether you sell next year or a decade from now, what you do today can position your business — and yourself — for a stronger outcome when the time is right.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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