Is It Time to Exit? How Business Owners Can Maximize Value and Find Freedom
Jan 16, 2025
When the thrill of running a business fades, and daily operations feel more like a grind than an opportunity, many owners find themselves asking: is it time to exit?
For Bruce Eckfeldt, a former founder and CEO, the decision to sell his business came after years of feeling misaligned with its direction. His journey offers a roadmap for business owners looking to maximize the value of their company while preparing for what comes next.
The Internal Shift: Recognizing the Signs
Bruce’s story began with passion and innovation. He built a successful business in lean-agile software development, scaling it to make multiple appearances on the Inc. 500 list. But over time, his enthusiasm waned. “After 10 years, I kind of lost steam,” Bruce said. “I realized I didn’t want to run this company for another decade.”
This feeling isn’t uncommon. Many business owners face a similar crossroads, especially after years stuck at a growth plateau. Recognizing this internal shift—when excitement turns to obligation—is the first step toward determining if it’s time to transition.
The Why and the When
One of the most important questions for any owner considering an exit is “why?” Bruce often starts his conversations with clients by exploring their motivations. For some, external factors like divorce, health issues, or market changes force the decision. For others, it’s a desire to de-risk or move on to something new.
“The why impacts everything,” Bruce explained. “If you don’t understand your motivation, you risk making decisions that don’t align with your long-term goals.” Clarity on the “why” naturally leads to the “when.” Owners who wait too long may miss their window, while those who act prematurely could leave value on the table.
Maximizing Business Value Before the Exit
Preparing a business for sale is as much about storytelling as it is about numbers. According to Bruce, there are two critical components: internal readiness and buyer perception.
Internal Readiness
Before stepping into the market, owners must address key factors that drive valuation:
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Profitability Trends: Sustained or improving margins signal a scalable operation. Declining profitability raises red flags for buyers.
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Normalized Financials: Owners who treat their business as a personal ATM often need to “clean up” their books, showing potential buyers what the true profit picture looks like.
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Risk Mitigation: Reducing dependency on key clients or individuals, including the owner, increases buyer confidence.
Buyer Perception
A compelling narrative can significantly enhance perceived value. Bruce uses the “Rembrandt in the Attic” analogy to explain how strategic buyers evaluate businesses. “If your company has unique assets—be it intellectual property, client relationships, or market position—it might be worth exponentially more to a strategic buyer than to a financial buyer,” he said.
Understanding what makes your business uniquely valuable and presenting that clearly can drive competition among potential buyers, ultimately increasing the sale price.
Preparing for the Process
Exiting a business isn’t just a transaction; it’s a transition. Bruce emphasizes the importance of assembling the right team, both internally and externally.
The Internal Team
A strong leadership team capable of running the business without the owner is essential for a smooth transition. Buyers, especially financial ones, often expect continuity in operations post-sale.
The External Team
Bringing in experienced professionals—lawyers, accountants, and potentially investment bankers—at the right time is crucial. “These advisors help ensure you’re asking the right questions and avoiding costly mistakes,” Bruce noted. However, he warns against engaging transaction-focused professionals too early, as they may steer the process prematurely.
The Emotional and Practical Side of Letting Go
Exiting a business is more than a financial decision; it’s an emotional journey. For Bruce, selling his company brought an initial sense of relief, followed by an existential crisis. “I didn’t know what I wanted to do next,” he admitted. “Having a plan for the next chapter is essential.”
Whether it’s starting a new venture, traveling, or focusing on family, owners need something to pull them forward. Without this pull, fear and uncertainty can lead to self-sabotage during the sale process.
Final Advice from Bruce
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Start with the Why: Understanding your motivation lays the foundation for every decision.
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Plan Early: The earlier you begin preparing your business, the more options you’ll have. Ideally, start planning three to five years before you hope to exit.
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Build Trust: Transparency with potential buyers builds confidence and expedites the process. Address skeletons in the closet proactively.
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Think Beyond the Sale: Consider how the exit will impact your life and the lives of those around you. What’s your vision for the future?
Exiting a business is both an end and a beginning. By aligning your goals, preparing your company, and assembling the right team, you can transition not just successfully but meaningfully. As Bruce says, “Freedom is choice. The goal is to create the choices that align with the life you want to lead.”