Preparing for a Successful Business Exit: A Strategic Guide for Australian Founders

In mid-2020, the owners of a multi-generational food services based in Victoria made a decision that would profoundly affect their exit outcome. Rather than approaching a potential sale as-is, they restructured early. They separated their land holdings into a discrete property trust, isolated the trading entity, and elevated a general manager to take over daily operations. Within eighteen months, they sold the core business to a domestic food manufacturer at 11.4× EBITDA – a valuation at the top end of the range for mid-market agrifood companies in Australia. They retained the land and negotiated a leaseback, providing long-term passive income and tax efficiency.

This was not by accident. It was the result of careful planning, structure, and advice. Most importantly, it highlights a fundamental truth about business exits: value is not created at the time of sale. It is harvested then – but planned well before.

The following article is intended to provide families with some key considerations for maximising an eventual sale, important action items, the relevant external groups that should be involved in the process - and when.

Understand the Landscape: Know Your Multiples

The first step in preparing for a successful sale is to understand what buyers typically pay for businesses like yours. Almost everyone believes their business is worth ‘more’ or compares it to the top end of their industry. But does it deserve to be?

In Australia, valuation multiples vary substantially by sector, scale, and structure. Recent deal data across mid-market transactions (typically $25 – $250 million in enterprise value) suggests:

• Manufacturing and engineering businesses usually trade between 3× and 5× EBITDA, with revenue multiples of 0.3 – 0.5×, depending on specialisation and contracts. Higher-end is 6–8x EBITDA.

• Consulting and architecture firms generally achieve 3 – 4× EBITDA, occasionally up to 6×, but with a tighter range due to key-person risk and lower scalability.

• SaaS businesses with recurring revenue and high growth can command 10 – 15× EBITDA, and often 3 – 6× revenue – far exceeding other industries. The same can apply to some luxury goods brands.

• Insurance brokerages, driven by recurring commissions, have achieved valuations over 11× EBITDA, underpinned by strong client retention and cashflow predictability. Particularly from large listed acquirers or PE.

• Retail and wholesale operations, particularly those with thin margins or key-person reliance, tend to attract 2 – 4× EBITDA, or 0.2 – 0.4× revenue.

• Construction and mining services firms generally fall between 4 – 6× EBITDA, unless they offer specialist IP or annuity-style contracts.

• Consulting firms, such as infrastructure, environment, planning, have attracted between 4–8x, with the higher end being skewed by strategic transactions.

These ranges are not abstract – they are the lens through which buyers and corporate advisers evaluate risk and return. Knowing your industry benchmark is the foundation for shaping a realistic valuation strategy.

Action: Request recent sector-specific deal data from corporate advisers or brokers. Compare your earnings profile, revenue mix, customer diversity and cost base against similar businesses.

Ask yourself: if I were buying this business, what would I pay – and why?

Structure the Business for Sale, Not Just for Operations

A business that is well-run is not always well-structured for sale. Many owners – especially those who’ve grown organically – intertwine trading operations with non-core assets like real estate, vehicles, or passive investments. While efficient for tax or control, this bundling can cloud value and create transaction friction.

For example, a buyer of a manufacturing business wants streamlined operations, not exposure to landholdings or legacy family assets. Real estate lowers return on capital and can complicates negotiations. If not structured clearly, it can even reduce the multiple applied.

Action: Review your group structure with an accountant and M&A lawyer.

Consider:

• Separating trading and non-trading assets

• Replacing trusts with companies if foreign buyers are likely

• Rationalising dormant or legacy entities

• Preparing lease agreements for any property retained

Well before sale, ensure that each business unit is clean, standalone, and saleable.

Improve the Quality of Your Financials and Forecasts

One of the fastest ways to increase your sale price – and reduce discounts during due diligence – is to produce timely, accurate, and normalised financials. Buyers don’t pay for opportunity; they pay for certainty. The more reliable your numbers, the greater their confidence in future returns.

This goes beyond audited accounts. Buyers want management reports that reconcile to financials, explain variances, and show evidence of operational control. They will test normalisations – such as owner salaries, one-off expenses, and non-cash items – closely.

A high-growth business should also prepare forecasts that are both ambitious and defensible. Ideally, these forecasts align to KPIs like customer retention, margin expansion, and pipeline conversion.

Action:

• Engage an external CFO or controller to prepare monthly management accounts

• Recast historical earnings with clean, documented add-backs

• Build a bottom-up forecast with scenario modelling

• Ensure cash flow, working capital and capex assumptions are credible

When the buyer asks, “How confident are we this will continue?” – your financials should answer the question before you speak.

Minimise Key-Person Risk

Founders often believe they are indispensable. This may be true operationally – but from a buyer’s perspective, it’s a liability. The more a business relies on you personally, the less valuable it becomes.

Reducing key-person risk doesn’t mean becoming irrelevant. It means proving that the engine runs without you. That your team can lead, clients will stay, and decisions will be made – whether or not you’re in the room.

Whether you are set on selling or not – this approach allows you to transition operations in a way that gives you your time back.

Action:

• Hire or elevate senior leaders to take over commercial, operational, or client-facing functions.

• Introduce incentive plans to retain key staff post-sale.

• Ensure documented systems exist for key workflows, reporting and compliance.

• Non-compete clauses are becoming less enforceable in Australia. Design these for key employees in a pragmatic way – if incentives and ownership have been offered. Incentive structures should make these less relevant or required.

Buyers pay premiums for businesses that don’t break when the founder walks away.

Focus on Revenue Quality and Customer Concentration

Not all revenue is equal. Recurring revenue – especially contracted or subscription-based – is more valuable than project or transactional income. Likewise, a diversified customer base is worth more than one dependent on a handful of large clients.

Many founders wait until they’re ready to sell before addressing these issues. But buyers will apply risk discounts to concentrated or unstable revenue – either lowering the multiple or increasing the earn-out.

Action:

• Convert informal relationships into contracts or multi-year agreements

• Shift clients onto retainers or subscription-style billing

• Monitor and reduce customer churn

• If top customers represent >20% of revenue, develop strategies to broaden the base

In essence: lock in your upside, reduce dependency, and prove stability.

Create a Growth Story – And Evidence to Support It

Every buyer wants to believe the business they’re acquiring will grow. But belief alone isn’t enough. To extract a premium, you must demonstrate growth potential with a clear, evidence-backed plan.

This is especially critical for private equity or strategic buyers looking to justify higher valuations. They want a path to double profits in 3 – 5 years – and they need proof that the foundation is in place.

Action:

• Develop a 3 – 5 year strategic plan, including new products, markets or acquisitions

• Show evidence of traction: trial customers, early adoption, scalable processes

• Build a pipeline that demonstrates forward visibility and momentum

A compelling growth story turns a valuation from a multiple of history to a multiple of potential.

Begin Building a Data Room Early

Due diligence is not just a check-box exercise – it’s the buyer’s audit of your credibility. A well-prepared data room signals professionalism, transparency, and reduces delays or uncertainty.

Many business owners underestimate the time and effort needed to assemble this material. Missing documents, inconsistent contracts, or poor HR records can all undermine confidence and invite renegotiation.

Action:

• Start a draft data room 6 – 12 months before initiating a sale

• Include: financials, tax returns, legal structures, employee agreements, IP filings, lease documents, customer contracts, policies

• Use a secure digital platform (Dropbox, Box, SharePoint, Ensarada) with indexing

Be proactive, not reactive. Let the buyer’s diligence validate the value you’ve already proven.

Engage a Corporate Adviser to Maximise Competitive Tension

Experienced M&A advisers are not just brokers. They craft your narrative, target appropriate buyers, and create competitive tension – often lifting valuations by 1 – 2× EBITDA.

While some business owners attempt direct approaches, structured processes typically yield better outcomes, cleaner terms, and more aligned partners.

Action:

• Select an adviser with relevant sector expertise, and a track record in your deal size

• Clarify the process timeline, fee structure, and buyer list

• Collaborate on building an Information Memorandum (IM) and marketing documents

• Let them handle negotiations – focus your energy on maintaining business performance

In a well-run process, buyers compete for your business. That dynamic, more than any spreadsheet, drives price.

Protect Your Legacy and Culture

Selling your business is more than a financial transaction – it’s a handover of legacy. The relationships you’ve built with clients, staff, and community are often part of your identity.

Different buyers bring different cultures. Strategic buyers may merge your team into theirs. Private equity may overhaul leadership or seek rapid returns. Family offices may preserve continuity and values.

Action:

• Clarify what matters to you: staff security, brand preservation, community impact

• Include cultural alignment as a key buyer selection filter

• Use sale terms – such as brand licence, employment guarantees, or transitional roles – to protect what you’ve built

When the cheque clears, will you still be proud of what happens next?

Understand the Legal, Tax and Deal Mechanics

The difference between a “good” deal and a “great” one is often found in the fine print. Earn-outs, warranties, indemnities, completion conditions – all shape what you actually receive, when, and with what risk.

Tax treatment is equally critical. For eligible businesses, the small business CGT concessions, 15-year rule, and superannuation contributions can materially reduce or defer some tax.

But these benefits require precise planning and structure. Timing, dispersement and ownership structures also impact this

Action:

• Engage an M&A lawyer experienced in mid-market deals

• Conduct a legal health check on contracts, leases, employee entitlements and IP

• Engage your accountant and adviser to model after-tax proceeds and ensure eligibility for concessions

Don’t discover payroll, tax problems, or structuring problems after terms are agreed. Structure first, negotiate second.

Exiting on Your Terms

Selling a business is one of the most important decisions a founder will ever make. It is the final act of creation – the point where years of effort convert into freedom, legacy, and capital.

But the best exits don’t happen by accident. They are designed, prepared, and executed with rigour. By understanding your valuation landscape, improving structural and financial readiness, reducing key risks, and engaging expert advisers, you don’t just sell your business. You sell it well, and importantly on your terms, not theirs.