10 Critical Mistakes That Can Derail Your Business Exit
Exiting your business is one of the most significant financial and emotional decisions you’ll ever make. Yet, too many business owners approach it without a clear strategy, putting years of hard work and wealth-building at serious risk.
Whether you plan to sell soon or years down the road, it’s crucial to recognize the most common (and costly) pitfalls that can derail your transition. Below are ten mistakes every business owner should avoid when considering exiting their business.
1. You don’t have an exit plan.
Waiting until you’re overwhelmed, burned out, or facing a health or family emergency is not a strategy. A reactive exit leads to rushed decisions, reduced value, and unnecessary stress.
Business exits are often triggered not by choice but by circumstances commonly known as the Exit Planning Institute’s 5 D’s: Death, Disability, Divorce, Disagreement, and Distress. Any of these can abruptly shift your timeline and priorities, forcing you into a transition before you're ready.
A clear, structured, proactive plan gives you options and peace of mind.
2. You’re misjudging the value of your business.
Many owners either overvalue or undervalue their business, both of which can be costly. Emotional attachment can lead to inflated expectations that deter qualified buyers and prolong the sale process.
On the flip side, undervaluing your business may result in leaving significant money on the table, especially if you don’t understand what drives your enterprise value.
Accurate valuation helps owners understand how the market perceives their business, what buyers are willing to pay, and how to position their company to justify its value. A realistic, well-supported business valuation helps attract serious interest and maximizes your outcome.
3. You’re relying on one buyer when you’re ready to sell.
Maybe you’ve decided to sell after hearing from a very interested buyer. However, pinning your hopes on one buyer is a gamble. There are several reasons why they could walk away – or worse, use your lack of options as leverage.
It’s best to research your options and not jump at the first opportunity that comes along. A competitive, multi-buyer environment strengthens your position and ensures you get the best deal.
4. Your business is too dependent on you.
Value Builder refers to this problem as “Hub & Spoke.”
If your business can’t run without you, it’s not sellable. Buyers want proven systems, a strong team, and sustainable operations. When you're the face, the fixer, and the decision-maker, your departure makes the business unstable.
5. You’re not keeping accurate financial records.
To sell your business in good faith, buyers need to trust your financial numbers.
Sloppy books, unclear financials, or missing documentation raise red flags and can tank a deal. Clean, accurate records not only boost buyer confidence, they also boost your valuation.
If you’re worried about the state of your books before going into the selling process, it might be worth it to contact a bookkeeping service to help.
6. You haven’t considered tax implications.
Selling a business without proper tax planning can result in liabilities you may not be aware of. According to the IRS, when you sell your business, all of the business's assets are sold, not just one.
Depending on the structure of your deal, taxes will be handled differently. To ensure that you can preserve your wealth and minimize your tax liability, planning with tax professionals is essential.
7. You didn’t vet your buyer.
Not all buyers are created equal. Without a vetting process, you waste time on unqualified prospects, risk exposing sensitive information, and could potentially damage your reputation.
Protect your business by ensuring buyers are financially capable, serious, and strategically aligned.
8. You don’t have a plan for what comes next.
According to Value Builder, 75% of business owners regret selling their business one year after they exit. Why might this happen?
Even if the sale goes perfectly, many owners are unprepared for what comes next, whether that’s retirement, buying another business, or staying on in an advisory capacity.
Without a post-sale plan, the excitement can quickly give way to boredom, regret, and even depression.
Evaluating your personal readiness to exit beforehand can help prevent regret.
9. You didn’t keep your employees in the loop.
Your team is part of your value. Dropping the bombshell too late can cause morale issues, walkouts, or even sabotage. The right communication strategy helps retain talent and reassures buyers of business continuity.
10. You’ve overlooked alternative exit options.
A third-party sale isn’t the only path. Family succession, employee stock ownership plans (ESOPs), and management buyouts can often be more lucrative, tax-efficient, or better aligned with your legacy. Discuss your options with a certified exit planning advisor before committing.
Improve Your Business Value with Chatterton Business Solutions
Selling your business shouldn’t be a leap into the unknown or based on reactive emotions. A strategic, well-orchestrated transition protects your legacy and maximizes your return.
Avoiding these mistakes starts with early planning, honest assessments, and trusted advisors to help your journey.
Don’t leave your life’s work to chance and make mistakes you’ll regret. Contact us to start planning your business exit today.
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About the AuthorArrash ZareFinancial Planner, CFP®, ChFC®, CLU ®, WMCP®, RICP®, BFA™, CPFA®, NSSA®, CEPA® |
