Five years seems like a long time. In mergers and acquisitions, it isn't.
“I'll retire in five years. I still have time.”
It's a common line among business owners aged 55–60. And it's understandable. On a personal level, five years is plenty of runway.
When it comes to selling a business, not so much. A well-structured deal can take between 9 and 18 months. But what determines the price doesn't happen in the negotiation. It happens before.
If you want to retire in five years, you're not at the start of the process. You're at exactly the right moment to start preparing the company.
The real timeline if you're retiring in five years
Year -5: identify what the market will penalize
A real-world scenario: a company with €3.5M in revenue. EBITDA of €600,000. A profitable, stable business.
What does the business owner usually think?
“If I make money every year, a buyer will show up whenever I want to sell.”
What actually happens?
The buyer looks at risk first, not profit.
They ask questions like:
- What happens if the owner leaves tomorrow?
- Who manages relationships with key customers?
- Is the financial information clear, or does it need constant explanation?
If 70% of decisions go through you, the company isn't ready to be sold. Even if it's profitable.
Year -5 isn't for finding a buyer. It's for identifying what's reducing your future valuation today.
Years -4 to -3: reduce dependence on the founder or CEO
Many business owners believe their value lies in the knowledge they've built up over decades.
And that's true.
The problem is that, for a buyer, knowledge that hasn't been transferred is risk.
A common situation:
A profitable company.
Good margins.
A loyal customer base.
But:
- Key relationships live on your phone.
- There are no signed contracts with long-standing customers.
- Pricing decisions go through you.
- Supplier negotiations depend on your personal experience.
- There's no structured documentation of the company.
What does the business owner think?
“That proves I'm indispensable.”
What does the buyer think?
“If they disappear, the business loses stability.”
And when the buyer perceives structural dependency, it can translate into:
- A lower multiple.
- A larger variable component.
- A longer mandatory stay.
What you should really be doing in these years
It's not just about delegating tasks. It's about building a company that can survive without you.
That means:
1️⃣ Formalize what's informal
Many SMEs run on long-standing trust.
But trust can't be audited.
If 30% of your revenue depends on verbal agreements, that's pure risk in a sale process.
Formalizing contracts isn't red tape.
It's turning stability into negotiable value.
2️⃣ Turn customers into a portfolio, not personal relationships
There's a huge difference between:
“The customers are mine”
and
“The company has recurring customers.”
If the relationship is with you, the buyer will buy cautiously.
If the relationship is institutionalized, the buyer is buying a business.
Reducing that personal dependence takes time.
That's why this work can't start in the final year.
3️⃣ Clarify your real EBITDA
In many family businesses, profit is “mixed”:
- Personal expenses
- Rent paid to related companies
- Non-standard compensation
The buyer will adjust all of that during due diligence.
Four or three years before selling is the time to start presenting financial statements that look like the ones the market will see.
Not to dress them up.
To put them in order.
4️⃣ Reduce risk concentration
A single customer, a single supplier, excessive geographic dependence.
These factors can't always be eliminated.
But they can be mitigated.
For example:
- If one customer accounts for 45% of sales, you can renegotiate a medium-term contract.
- If your margin depends on an exclusive supplier, you can develop alternatives.
The market penalizes concentration. And it rewards structural stability.
What changes when you do this work well
The difference isn't just financial. It's strategic.
A well-prepared company:
- Generates more competition among buyers.
- Lets you negotiate from strength, not urgency.
- Reduces disputes during due diligence.
- Lowers the likelihood of aggressive price adjustments.
- Gives you more room to negotiate the payment structure.
Above all, it changes the dynamics of the deal.
When the business already runs without depending on the founder, the buyer doesn't need to protect itself as much with:
- Large holdbacks
- Long stay periods
- Overly demanding conditions
That doesn't mean these mechanisms disappear — they're common in the lower mid-market — but their weight in the negotiation changes.
And that's key.
Because when the company is prepared, selling stops being a necessity and becomes an option.
And in M&A, whoever has options negotiates better.
Year -2: understand what you could really be worth
This is usually where the first reality check happens.
Many business owners associate value with the years they've invested.
The market pays for future cash-generating capacity, adjusted for risk.
Two companies with the same EBITDA can have very different valuations.
Why?
- One depends on the owner.
- The other runs without them.
- One has a customer that accounts for 40% of sales.
- The other is diversified.
Two years out is the time to get a realistic view of the market.
Not necessarily to sell right away, but to adjust expectations or shore up weak points.
Today, many first contacts happen in a structured, confidential way on digital platforms specializing in SMEs, where you can gauge interest without exposing sensitive information. Platforms like Deale enable exactly this kind of gradual approach.
Year -1: execute without urgency
If you've done the groundwork, the final year is about execution:
- Prepare structured documentation
- Identify the right buyer profiles
- Receive indicative offers
- Negotiate structure and price
- Get through due diligence
- Sign
If you haven't, the final year is stressful.
This is where many business owners discover that:
- Part of the price may be contingent on future results (earn-out).
- The buyer requires them to stay on for 2–3 years.
- Debt or working capital adjustments come up that reduce the final price.
When there's planning, you negotiate from a solid position.
When you're in a rush to retire, you negotiate out of necessity.
And the market notices.
What if, five years from now, you decide not to sell?
Preparing doesn't force you to sell.
In fact, many companies that start getting organized for a potential sale:
- Improve margins
- Reduce dependency
- Increase their capacity for bank financing
- Run better even if they're never sold
Preparing for a sale means professionalizing.
And professionalizing never hurts.
Clear signs you should start today
- More than 50% of customers call you directly.
- There's no real second line of decision-making.
- Closing the books requires constant explanations.
- You don't have a clear idea of what your company could be worth on the market.
If you're retiring in five years and recognize yourself in several of these points, you're not early.
You're right on time.
If you're five years from retirement, the best time to start isn't when you want to sell, but when you want to get prepared.
In that process, having a structured environment where you can understand how the market sees your company, what information buyers value, and how first contacts are organized can make all the difference.
On platforms specializing in buying and selling SMEs, such as Deale, companies can start confidentially, structure their information, and receive qualified interest when they're truly ready to move forward.
Preparing well today means negotiating better tomorrow.
