Most business owners dream of selling their business on their terms—at the right time, for the right price. Yet, reality tells a different story. Over 55% of business exits happen under unfavorable circumstances, such as illness, burnout, financial struggles, or sudden market shifts. Waiting until you have to sell is like checking your parachute after you’ve already jumped.
Instead of hoping for the best, what if you could anticipate and neutralize risks before they threaten your business’s value? Enter the pre-mortem approach—a strategic way to plan your exit by imagining what could go wrong and fixing it in advance.
The High-Stakes Reality of Business Exits
Consider Mark, the owner of a thriving engineering firm. He planned to sell in a year for a solid payday. Then, life threw a curveball—a sudden illness forced him to step away. Without a leadership succession plan or business continuity measures in place, the company floundered. Buyers sensed distress, and the only offers he received were insultingly low. What could have been a lucrative exit became a desperate fire sale.
Now, imagine if Mark had done a pre-mortem exit strategy years earlier. He would have identified potential risks, implemented solutions, and retained control over his exit. His business would have remained valuable, even without him at the helm.
The Pre-Mortem Strategy: How to Stay in Control
A pre-mortem involves three key steps:
1️⃣ Simulate the worst-case scenario—What if your biggest client leaves? What if a key employee quits? What if an economic downturn slashes your industry’s valuation?
2️⃣ Develop contingency plans—If a major client departs, do you have diversified revenue streams? If you face an unexpected health issue, does your leadership team know how to operate without you?
3️⃣ Ensure sale-readiness at all times—The best deals happen when you don’t need to sell. A well-prepared business attracts premium buyers, not bargain hunters.
The Key Pillars of a Pre-Mortem Exit Plan
1. Building Transferability
A business that can’t run without you isn’t a business—it’s a job. Buyers look for companies with systems, processes, and leadership in place. Ask yourself:
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Can your business function without your daily involvement?
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Do you have a management team that can sustain operations?
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Are your customer relationships tied to the company, or to you?
2. Establishing Corporate Governance & Risk Management
Buyers seek stability. Having clear governance structures—like an advisory board, documented SOPs, and financial controls—reduces risk and increases confidence in your business.
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Implement clear decision-making processes.
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Maintain transparent financial records.
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Have contracts in place that ensure business continuity.
3. Mitigating Risks Before They Become Problems
🔹 Diversify Your Client Base—No single client should account for more than 20% of your revenue.
🔹 Implement Flexible Pricing Strategies—In times of economic downturn, can you adjust pricing without hemorrhaging revenue?
🔹 Automate & Outsource Where Possible—This reduces dependency on key employees and increases operational efficiency.
4. Creating a Leadership Succession Plan
If you had to step away tomorrow, who would take over? Buyers pay a premium for businesses with leadership continuity.
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Train your second-in-command.
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Have clear roles and responsibilities for key executives.
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Document a transition plan to ensure a smooth handover.
The Entrepreneurial Mindset Shift
If you take one thing away from this, let it be this: You don’t plan your exit when you’re ready to sell—you plan it years before.
Waiting until you have to sell puts you in a weak negotiating position. The smartest entrepreneurs don’t just build great businesses—they build sellable businesses.
🔹 Are you running a business that is truly sellable?
🔹 What risks could derail your exit?
🔹 What can you do today to ensure you exit on your terms?
The best exits don’t happen by chance. They happen by design. Start your pre-mortem strategy today, and ensure that when the time comes, you own your exit—rather than being forced into one.
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