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Foundations: Exiting a Business

What an exit is, and the groundwork an owner needs before selling.

Why Start Here​

If you have never sold a business, the vocabulary alone can be disorienting: LOI, EBITDA, escrow, earnout, no-shop, working capital peg. This section builds the shared language and the basic mental model so the rest of the wiki makes sense. It does not assume you have a buyer, a banker, or even a firm decision to sell. It assumes only that you own something worth money and want to understand how it converts into cash.

The single most important reframe comes from Burlingham: selling is not a someday event you can ignore until you are tired. It is a phase of the business you should be preparing for now.

"Every entrepreneur exits. It's one of the few absolute certainties in business. ... you can choose when and how you exit, but you can't choose whether."

Burlingham, Finish Big, Introduction

Because exit is inevitable, the work of getting ready pays off whether you sell next year or in a decade. Burlingham frames the both/and bluntly.

"You should build a business today as if you will own it forever but could sell it tomorrow."

Burlingham, Finish Big, Introduction

What These Pages Cover​

The Foundations pages move from definition to readiness. What Is an Exit defines the event itself: transferring ownership for value. The Lifecycle of a Sale lays out the chronological arc from preparation through listing, offers, due diligence, and closing, drawing on McDannell's seven-step process, Burlingham's four stages, and Warrillow's three sections. Types of Buyers and Types of Deals: Asset vs Stock Sale cover who buys and how a deal is legally structured. How a Business Is Valued introduces earnings, multiples, and what drives the headline price.

The Two Numbers and the Readiness Question​

Before going anywhere near a buyer, McDannell insists you separate your dream price from the amount you actually need to net, and reverse-engineer backward from there.

"A company is worth what someone is willing to pay for."

McDannell, Get Acquired, ch. 2

That blank check cuts both ways: it means the right buyer can pay a premium, and it means an unprepared seller can be talked down. The defense is readiness, both of the business and of yourself. Readiness to Sell covers financial, operational, and psychological preparedness. Warrillow stresses that the price you get is not fixed but a function of how well you position the company in a buyer's eyes.

"The art of selling your business is getting someone to value something they cannot touch. In essence, they are buying a story about what your business could be in their hands."

Warrillow, The Art of Selling Your Business, ch. 1

A recurring foundational warning: a business that cannot run without you is worth less and harder to sell.

"A business that needs you isn't a flex, it's a disadvantage."

McDannell, Get Acquired, ch. 2

How to Use This Section​

Read these pages in order if you are new. If you already know the basics, treat Foundations as a reference layer: every deeper page in Concepts and Perspectives links back here for definitions. When a term is unfamiliar anywhere on the site, check the Glossary first.

Further Reading​

Sources: McDannell, Get Acquired Introduction, ch.1-2; Burlingham, Finish Big Introduction; Warrillow, The Art of Selling Your Business ch.1.