Exit readiness for private business owners: what buyers actually pay for

Every owner exits. The only question is whether it happens on your terms — a sale, a succession — or on the market’s terms, which for many businesses means closing the doors for whatever the stock and fittings will fetch. Business-brokerage industry estimates consistently put the share of listed small businesses that actually sell at roughly 20–30%, with some estimates reaching 40%. (Those figures come from US broker data — sources at the end — and no equivalent official Australian statistic exists, but every intermediary I speak with here recognises the pattern.) Most businesses that go to market do not find a buyer. The difference is rarely the product. It is readiness.

I spent thirteen years as a CEO building a distribution business more than 15x, and I now sit on the other side of the table, assessing businesses to acquire. Reading a business as a buyer is a different experience from running one — and it has sharpened my view of what owners should fix years before they ever call a broker.

The six things a buyer prices

1. Earnings quality. Not revenue — reliable, explainable profit. Clean monthly accounts produced on time, owner add-backs documented rather than argued, and two to three years of consistent history. Every question your numbers cannot answer becomes a discount.

2. Owner-independence. The single biggest discount factor. If customer relationships, supplier terms — especially overseas supplier relationships — and pricing decisions live in your head, the buyer is not purchasing a business; they are purchasing the hope that you can be replaced. They price that risk hard, or walk. (This is the same problem that caps your growth today; I’ve written separately about how to make the business less dependent on you.)

3. Customer and supplier concentration. A top customer above 15–20% of revenue, or a single source for a critical product line, is a risk the buyer inherits on day one. Diversification takes years, which is why it cannot wait until the sale process.

4. Systems and second-tier leadership. A business that runs on a weekly rhythm, a scoreboard and a leadership team transfers to a new owner. A business that runs on the owner’s adrenaline does not. Buyers can tell the difference within a day on site.

5. Supply chain durability. For importers: documented supplier agreements, alternate sources for critical lines, and ideally an own-brand range. At 4Cabling, building private label to roughly 70% of revenue did more than lift margin — it made the supply chain an asset a buyer could value rather than a set of personal relationships they couldn’t.

6. A growth story with evidence. Not a hockey-stick forecast — buyers discount those on sight. A pipeline with dated next steps, demonstrated pricing power, and a credible list of unexploited opportunities the new owner can fund.

The uncomfortable truth: exit readiness is just good management

Look back over that list. Clean numbers, owner-independence, diversified customers, systems, a durable supply chain, evidenced growth. There is nothing on it you would not want anyway. Every item raises profit and lowers stress now, whether or not you ever sell. That is the reframe that matters: exit readiness is not a project you run for a buyer. It is the standard you run the business to — the buyer simply pays you for having done it.

The three-year runway

Readiness cannot be manufactured in the six months before a sale, because the most valuable items need history. Buyers want two to three years of clean accounts, and a leadership team needs at least that long to demonstrably run the business. A practical sequence: in the first 90 days, get the numbers clean, measure your customer and supplier concentration, and write down the decisions only you currently make. In year one, build the second-tier leadership and the operating rhythm. From year two, run the machine and let the track record accumulate — that record is what the buyer is buying.

Where to start

The best time to start becoming exit-ready was three years ago; the second-best time is now, even if you have no intention of selling this decade. The Growth Scorecard is a free 10-minute diagnostic across strategy, sales and culture — the same three systems buyer prices. Your lowest-scoring pillar is where a buyer would start discounting, which makes it the right place to start fixing.