Exit Planning Starts Two Years Before You Talk to Buyers
By Chintan Dhanji, Managing Director, SC Strategy Consulting
Most founders and business owners start thinking about exit planning when they're ready to sell. By then, it's too late to maximize value.
I worked with a mid-market pharmaceutical company - a US capsule manufacturer whose owner wanted to retire within three to four years. He had a price in mind. Revenue had declined recently. And he wanted to know: can we get there?
The answer was yes - but not by finding buyers. By making the business worth buying.
The Mistake Everyone Makes
Exit planning isn't a transaction. It's a transformation. The mistake most owners make is treating it like a sales process: find buyers, negotiate, close. That's the last 10% of the work. The other 90% is positioning.
When I assessed this pharmaceutical company, the first thing I did wasn't build a buyer list. It was understand why revenue had declined, where the operational pressure points were, and what a strategic acquirer would actually value about this business.
The answer surprised the owner. His most valuable asset wasn't his product line or his customer relationships. It was his license to operate in the United States. For global pharmaceutical manufacturers looking to enter the US market, that license - and the manufacturing infrastructure behind it - was worth more than years of organic market entry.
But he'd never positioned around it. He was selling a capsule company. He should have been selling US market access.
Building the Business Before You Sell It
Once we understood what would drive acquirer interest, we worked backward. If US manufacturing licensure was the core value driver, what needed to be true about the business to maximize that value?
We developed a growth strategy across eight dimensions:
1. Financial health - Clean up the P&L, improve margins, demonstrate trajectory 2. Operational efficiency - Reduce cost structure, streamline production 3. Product expansion - Broaden the portfolio to show growth runway 4. Customer experience - Strengthen retention and satisfaction metrics 5. Sales and marketing - Build a pipeline that demonstrates demand 6. Technology - Modernize systems that an acquirer would inherit 7. HR and culture - Ensure key talent retention through transition 8. Governance - Tighten reporting, compliance, and board processes
Not all of these were equally important. We prioritized based on what mattered most to the buyer segments we'd identified. But the point is: every one of these initiatives made the business more valuable before we ever talked to a buyer.
Know Your Buyers Before They Know You
We analyzed four acquirer segments: private equity firms, direct competitors, vertical integrators, and adjacent industry players. For each, we assessed:
This analysis revealed something critical: the highest-value buyers weren't competitors. They were global manufacturers who needed a US production footprint. That reframed the entire positioning strategy.
Creating a Bidding War, Not a Negotiation
There's a fundamental difference between finding one buyer and creating competition. One buyer gives you a negotiation. Multiple interested buyers give you leverage.
The engagement sequence mattered. We didn't approach everyone simultaneously. We started with the buyers who had the strongest strategic fit and the highest willingness to pay. Then we created urgency by ensuring multiple parties were engaged in parallel - each knowing the others existed.
The result: a competitive three-way bidding process that lifted the valuation by approximately 25% above what the owner initially thought possible.
That premium didn't come from negotiation tactics. It came from two years of preparation - making the business more attractive, identifying the right buyers, and sequencing the engagement to create competition.
The Timeline Most People Get Wrong
Here's what a realistic exit timeline looks like:
24-18 months before sale:Most owners try to compress this into six months. It doesn't work. You can't fix revenue decline, clean up operations, and run a sale process simultaneously. The preparation needs to happen before the process starts.
The Build vs. Buy Reality Check
One thing I tell every owner considering an exit: the acquirer's decision to buy your company depends on alternatives. They can build the capability internally, partner with someone, or buy someone else.
Your job is to make buying you the obviously better choice. That means:
What I Learned
Exit planning is really just good business strategy with a deadline. Everything you do to prepare for a sale - improving operations, strengthening financials, clarifying positioning, building governance - makes the business better regardless of whether you sell.
The owner of the pharmaceutical company told me something after the bidding process concluded. He said the business was running better during the exit preparation than it had in years. The exit process forced the discipline that should have been there all along.
That's the real insight: don't wait for an exit to run your business like it's worth buying. Because someday, someone will ask.