Mark Hartmann on The CPA Zone: Three Exit-Planning Lessons Every Business Owner Should Hear
- Mark Hartmann, MBA
- Aug 17
- 7 min read
Most owners do not find out their business is difficult to sell until a buyer tells them.
I learned that lesson personally.
Years ago, a private equity group approached me about buying Ethicare Advisors, the healthcare cost-containment company I had built. Their proposal was essentially three years of compensation paid over three years—and then they would own the business.
I was stunned. I thought I had built a valuable company. They saw a company that still depended too heavily on me.
That difficult conversation forced me to look at the business through a buyer’s eyes. I began reducing owner dependency, developing the team, strengthening the systems, and building an enterprise that could continue performing without me at the center of every decision.
Three years later, the situation had changed dramatically. More than 40 interested parties were knocking on the door. Along the way, the company earned a place on the Inc. 5000 list three times, and I ultimately completed a successful sale.
That experience is one reason I enjoyed my recent conversation with Ryan D. Pulice, CPA, CTP, on The CPA Zone. Ryan and I discussed what exit planning really looks like, how buyers evaluate risk, why experienced advisors matter, and what owners can do now to improve their eventual outcome.
You can watch the full episode, “Exit Planning for Business Owners—Interview with Mark Hartmann,” on YouTube.
Here are three of the most important takeaways for business owners.
Here are three of the biggest takeaways for business owners:
1. A Valuable Business Must Be Transferable
There is an uncomfortable distinction every owner should understand:
Business buyers do not buy jobs. They buy businesses.
If the company cannot operate without the owner, the buyer is not acquiring a self-sustaining enterprise. The buyer is acquiring a cash flow stream that may disappear when the seller leaves—and possibly a full-time job that still needs to be filled.
That is why owner dependency can reduce value, weaken deal terms, extend the seller’s transition period, or make a business difficult to sell at all.
During the podcast, I described what I call the “kidnap test.” It is a simple thought experiment:
What would happen if you were unavailable for the rest of the day?
What about the rest of the week?
Could the company continue operating for a month?
Could it continue for an entire quarter without a serious disruption?
The longer the business can perform without the owner, the more transferable—and generally more attractive—it becomes.
Reducing risk also extends beyond the owner. Buyers will look for other single points of failure throughout the company.
If one salesperson controls every major customer relationship, who can step in if that person leaves? If one supplier provides a critical material or product, what happens if that supplier raises prices or stops delivering? If one employee holds essential knowledge, is that knowledge documented and shared?
Owners can begin addressing these concerns by:
Delegating day-to-day decision-making
Building a capable management team
Documenting important processes
Cross-training employees
Giving major customers more than one company contact
Developing backup sources for critical products and materials
The goal is not to make the owner unimportant. The goal is to make the company valuable without requiring the owner to remain permanently attached to it.
Buyers are purchasing future, transferable profits—not simply rewarding the seller for years of hard work.
2. Exit Planning Should Begin Earlier Than You Think
Many owners imagine that selling a business begins when they decide to call an M&A advisor.
In reality, the work often needs to begin two or three years earlier.
Financial records are a good example. Clean, consistent books help a buyer understand how the company earns money and whether its reported performance can be trusted. Disorganized statements, undocumented adjustments, mixed personal expenses, and numbers that do not reconcile create doubt.
And buyer doubt rarely improves an offer.
Owners who have time should work with their accounting professionals to establish clear financial reporting and, when appropriate, develop several years of CPA-reviewed financial statements. A clean financial history cannot be manufactured a few weeks before due diligence.
Early planning is also personal.
Before choosing a sale target, an owner should work with a financial advisor or wealth manager to understand what the sale must accomplish. There is little benefit in selling a company for $5 million if the owner needs $10 million to support the life they want after closing.
Knowing the real target helps determine whether the owner is ready, whether the business needs more time to grow, and which deal structures may or may not be acceptable.
Tax planning also rewards an early start. Entity structure, transaction structure, purchase-price allocation, timing, and other issues can materially affect what a seller keeps. Some strategies require years of advance planning and may not be available once a buyer is already at the table. Owners should discuss their specific circumstances with qualified tax and legal professionals well before a transaction.
The larger point is that exit planning is not only for someone who expects to sell next month.
It is good business planning.
None of us can predict when death, disability, divorce, disagreement, or an economic downturn may force a change in plans. A company with strong systems, reliable reporting, multiple customer and vendor relationships, and a capable team is better prepared for both an eventual sale and an unexpected event.
It is also usually easier to own.
Running a business as though it should always be ready for a buyer can give the owner more freedom long before the company is sold.
3. The Right Deal Team Can Protect Both Value and Terms
Selling a lower-middle-market company is not a good place for professionals to learn on the job.
Business owners are often highly experienced in their own industries. But most will sell a company only once. The buyer, private equity group, lender, attorney, accountant, and other professionals across the table may complete transactions regularly.
That experience gap matters.
A strong transaction team should include:
A financial advisor or wealth manager who can help the owner define the financial objective and prepare for life after the sale
A transaction-experienced CPA and tax advisor who understands the company’s financials and can evaluate the tax consequences of the deal
An experienced M&A attorney who negotiates business transactions regularly—not a general practitioner learning deal law while the clock is running
An M&A advisor or business broker with experience completing transactions in the company’s value range
I sometimes refer to the CPA, transaction attorney, and M&A advisor as the three-legged stool supporting the deal. If one leg is weak, the transaction becomes much less stable.
This is not simply about getting to closing. It is about getting the right deal to closing.
Owners naturally focus on the headline price. But cash at closing, earnouts, seller financing, rollover equity, working-capital requirements, indemnification, transition obligations, and other terms determine what the seller receives, when it is received, and how much risk remains after closing.
A higher offer with weak terms may produce a worse outcome than a slightly lower offer with more cash at closing, fewer contingencies, and greater certainty.
The right advisors help the owner understand those tradeoffs, position the company properly, create a disciplined process, manage negotiations, and keep the transaction moving when difficulties arise.
Their fees should be viewed in the context of what is at stake. Trying to sell a company by responding alone to an unsolicited buyer email may seem economical, but it can leave the owner negotiating without competitive tension, without a clear understanding of market value, and without an experienced advocate protecting the deal’s economics.
For someone who may get only one opportunity to convert decades of work into financial security, that is a serious risk.
Build the Business a Buyer Wants Before You Need the Buyer
The strongest exit strategy is not a clever negotiation at the last minute.
It is the work completed while the owner still has time: strengthening the financials, reducing dependency, developing the management team, understanding the personal objective, and assembling experienced advisors.
That preparation can increase value, improve terms, reduce transaction risk, and give the owner more control over when—and whether—to sell.
Thank you to Ryan D. Pulice and The CPA Zone for inviting me to have this important conversation.
Watch the full episode on YouTube to hear the complete discussion, including the story behind my own exit, the “kidnap test,” the importance of clean financials, and why the right team can make or break a transaction.
I also mentioned an offer for podcast listeners during the episode. If you are considering selling your business within the next few years, email me at mark@hartmannrhodes.com, mention Ryan’s program, and I will send you a complimentary signed paperback copy of my book, Sweat Equity Payday.
At HartmannRhodes, we advise owners of privately held companies typically valued between $1 million and $25 million. If you are considering a sale in the next one to three years, a confidential conversation now can help you understand what buyers are likely to see, which issues may affect value, and what can still be improved before timing becomes pressure.
You only sell your business once. Make it count.
Mark Hartmann is a former business owner turned M&A advisor—and the author of Sweat Equity Payday—who knows firsthand what it takes to build, grow, and sell a successful company. A three-time Inc. 5000 CEO honoree, he led his own eight-figure sale and now helps business owners sell companies worth $1M to $25M. Mark understands that selling a business is personal, not just financial. That’s why he works closely with owners to maximize value, protect their legacy, and transition on their terms.
He holds an MBA from Eastern University and a master's degree in organizational change management from St. Elizabeth University, as well as Certified M&A Professional (CM&AP), Certified Business Intermediary (CBI), Certified Exit Planning Advisor (CEPA), and Certified Value Builder (CVB) credentials.
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HartmannRhodes advises owners of companies typically valued between $1–$25 million. If you’d like a structured pre-sale valuation review and a readiness roadmap, we can walk you through the process and tailor it to your timeline and goals. Contact us today!