When should I start preparing for an exit?

The best time to start preparing for an exit is 2–3 years before you intend to sell. This gives you time to address valuation gaps, reduce founder dependency, clean up financials, build recurring revenue, and optimize your EBITDA margin — all of which directly impact your sale price and deal certainty.

What is an exit readiness score?

An exit readiness score measures how prepared your company is to successfully execute a sale or recapitalization. It evaluates financial quality, operational independence from the founder, strategic positioning, market timing, deal team readiness, and buyer-side risk factors. A higher score correlates with faster close timelines, stronger valuations, and fewer deal blow-ups.

What are the most common reasons deals fall apart for mid-market companies?

The top reasons mid-market M&A deals fail to close: (1) financial statements that don't hold up in due diligence, (2) heavy founder dependency with no succession plan, (3) customer concentration risk above 25%, (4) undocumented or unprotected IP, (5) working capital surprises during close. The Exit Readiness Diagnostic identifies which of these applies to your business.

What is the KCENAV Exit Readiness Assessment?

The Exit Readiness Assessment evaluates both business and founder readiness for a liquidity event — sale, succession, management buyout, or ESOP. It measures business transferability, financial documentation, succession depth, personal financial readiness, and strategic clarity about exit goals.

What is the difference between being "exit ready" and just having a profitable business?

A profitable business is necessary but not sufficient for exit readiness. Exit readiness requires that the business can run without the founder (transferability), financial records are clean and auditable, customer relationships are institutional not personal, and the founder has clear goals for what happens after exit. Many profitable businesses score below 50 on exit readiness because of structural dependencies.

How early should a founder start preparing for exit?

Best-in-class founders begin exit preparation 3–5 years before target close. This allows time to address the highest-value gaps: building management depth, shifting to recurring revenue, reducing customer concentration, and documenting systems. Founders who begin preparation less than 12 months before exit typically achieve 15–25% lower multiples.

What personal readiness factors affect exit outcomes?

Personal readiness is frequently underestimated. Key factors include: clarity on post-exit identity and purpose (founder depression is common after exit), alignment on minimum acceptable price vs. ideal structure, tax planning and entity structure optimization, and relationship alignment with co-founders or family members who have stake in the business.

What is a strong Exit Readiness score?

A score of 70+ indicates high readiness to run a competitive exit process within 12–18 months. Scores of 50–69 indicate a good business needing 12–24 months of targeted preparation. Scores below 50 indicate foundational work needed before attempting an exit — proceeding without preparation at this level typically results in a distressed sale or failed process.

Free Diagnostic

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Exit Readiness
Diagnostic

15 questions. Discover your exit readiness score, estimated EBITDA multiple range, and the specific gaps that will discount your valuation — or the strengths that will command a premium.

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Financial Documentation

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Customer Concentration

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Owner Dependency

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Recurring Revenue

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Legal & IP

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Buyer Attractiveness

Questions

Pillars

Minutes

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Calculating your Exit Readiness Score

Analyzing 6 pillars across 15 dimensions...

Exit ReadinessDiagnostic

Exit Readiness
Diagnostic