You can build a profitable company, clean up the financials, attract a serious buyer, and close on favorable terms and still regret selling.
That sounds impossible until the emails stop, the meetings disappear, and an ordinary Tuesday suddenly has no structure.
In Episode 14 of From Burnout to Bought Out, Jon and Ryan explain why preparing the business is only one-third of preparing for an exit. True exit readiness is a three-legged stool:
- The business is ready.
- The owner is ready.
- The wealth plan is ready.
Most owners spend nearly all their planning energy on the first leg. They work on EBITDA, growth, financial reporting, recurring revenue, and the data room. Those things matter, but a stool with only one strong leg still collapses when someone tries to sit on it.
The same is true of an exit plan.
Why a Successful Sale Can Still End in Regret
In the episode, Jon and Ryan cite a striking finding: roughly three out of four owners regret their decision after selling. The problem is not always the offer, the buyer, or the transaction. Often, the owner prepared the company for sale without preparing for life after it.
Consider two owners with similar companies in the same industry.
The first owner builds a highly sellable business and completes a clean transaction. Eighteen months later, he is sitting in his kitchen asking his wife what he is supposed to do with the rest of his life. Neither of them has an answer.
The second owner improves the business while also building a post-exit identity and a plan for the proceeds. The sale may look similar on paper, but life after closing feels completely different.
The difference is not simply the deal. It is the strength of all three legs.
Exit Readiness Leg One: Is the Business Ready?
A ready business is not merely profitable. Its value must transfer to the buyer after the owner leaves.
Jon and Ryan describe a sale-ready business using three words:
Predictable
The company has clean financials, timely monthly closes, a 13-week cash-flow forecast, and a scorecard that identifies problems before they become emergencies. Leaders can see what is happening without waiting for the bank balance to deliver bad news.
Transferable
The company can operate without the owner controlling every decision. Core processes are documented, the leadership team runs day-to-day operations, and customer relationships do not depend entirely on the founder.
De-risked
The business has reduced the risks that buyers use to justify a lower offer. This includes customer concentration, key-person dependency, weak contracts, inconsistent revenue, and undocumented processes.
One example from the episode shows how expensive these risks can become. A $6 million service business generated 43% of its revenue from one customer. The buyer did not walk away, but the offer dropped by one full turn of EBITDA—approximately $900,000.
One customer changed the price of the entire company.
This is why operational readiness matters. Buyers pay for earnings they believe will continue after the owner exits. Every risk that makes those earnings less predictable becomes a discount.
Exit Readiness Leg Two: Is the Owner Ready?
This is usually the most neglected leg because it does not look like a traditional business problem.
For many founders, the company is more than an asset. It provides identity, purpose, structure, relationships, and a reason to get out of bed on Monday morning. Selling removes all five at once.
Personal exit readiness requires honest answers in four areas:
Identity
Can you explain what you do without mentioning your company? If the business is your entire identity, leaving may feel less like a successful transition and more like a loss.
Purpose
What will give your life meaning when the business no longer needs you? That could include mentoring, serving on a board, supporting a nonprofit, starting a different venture, or pursuing work that was impossible while running the company.
Structure
What does a normal post-exit week actually look like? “I’ll play more golf” is not a complete plan. What will you be doing at 10:00 a.m. on an ordinary Tuesday?
Relationships
Many owners build their closest relationships inside the company. Employees, customers, vendors, and familiar weekly routines form an entire social world. After the sale, that world can shrink overnight.
In the episode, Jon and Ryan share the pattern of an owner who sold at 68, spent six months at home, and then purchased a smaller, more difficult company in the same industry simply to have something to do. At 70, he was back to running a job he did not financially need.
That is not a failure of valuation. It is a failure to plan the second leg.
Exit Readiness Leg Three: Is the Wealth Plan Ready?
For many owners, most of their net worth is trapped inside the business. The sale transforms years of concentrated business value into a single check.
The critical question is simple: What does that check need to do?
The headline sale price is not the amount an owner ultimately keeps. Federal and state taxes, transaction costs, advisory fees, escrow holdbacks, earnouts, and contingent payments all reduce the proceeds. Jon and Ryan explain that the net amount can be 25% to 40% below the headline figure.
Owners should understand that number before signing a letter of intent not after closing.
A complete wealth plan should address:
- The owner’s after-tax proceeds
- Post-exit lifestyle and cash-flow needs
- Investment strategy and risk tolerance
- Family wealth transfers
- Estate and trust structures
- Charitable goals
- Funding for a future venture
Tax planning is especially time-sensitive. Entity restructuring, basis cleanup, charitable strategies, and trust structures can take years to implement properly. Starting six months before a sale may be too late. Two years provides more options, while three to five years creates a much stronger planning window.
Owners often build wealth by accepting concentrated risk. After the exit, the goal changes from creating wealth to protecting it. As Ryan explains in the episode: you may make your money by taking risk, but you keep it by managing risk differently.
How to Score Your Three Exit-Readiness Legs
You do not need a buyer at the door to begin preparing. Start with a simple scorecard.
Score each leg from 1 to 10:
Leg One: The Business
Ask yourself:
- Do the books close within 15 business days?
- Can the company operate for two weeks without me?
- Is any customer responsible for more than 20% of revenue?
- Do we maintain a 13-week cash-flow forecast?
- Are our core processes documented?
Leg Two: The Owner
Ask yourself:
- Do I panic when I go two weeks without checking email?
- Can I describe an ordinary Tuesday after the exit?
- Do I have meaningful relationships outside the company?
- Do I know what I want to build, support, or experience next?
Leg Three: The Wealth Plan
Ask yourself:
- Do I know my after-tax exit number?
- Have I recently spoken with a tax or estate-planning professional?
- Is my current entity structure still appropriate?
- Have I modeled post-exit cash flow at different sale prices?
- Do I have a plan for investing and protecting the proceeds?
Whichever leg receives the lowest score is the one most likely to fail under pressure.
Do Not Try to Fix Everything at Once
Once you identify the weakest leg, choose one meaningful priority for the quarter.
If the business is weakest, improve one operational value driver. Clean up the monthly close, reduce owner dependency, document a critical process, or address customer concentration.
If personal readiness is weakest, write a one-page post-exit vision. Describe your purpose, weekly structure, relationships, and the work you want to continue doing.
If the wealth plan is weakest, bring your tax professional and wealth advisor into the same conversation. Make them work from one integrated exit goal instead of separate assumptions.
The goal is not to start three major projects. It is to finish one meaningful priority, score yourself again next quarter, and repeat the process.
How Early Should Exit Planning Begin?
Earlier than most owners expect.
Building a leadership team, diversifying customers, creating recurring revenue, and reducing owner dependency can take three to seven years. Developing a meaningful post-exit identity also takes time because potential roles and activities need to be tested—not merely imagined. Tax, estate, and wealth strategies may require several years to implement effectively.
Jon and Ryan recommend thinking seven to ten years ahead when possible. Three years is closer to the minimum for genuine planning. Under three years, the work becomes triage.
That does not mean owners with shorter timelines should give up. It means they need to be honest about the available runway and prioritize the risks that matter most.
The Exit Is Decided Before the Closing Table
Episode 14 closes with the story of an owner who spent eight years building a company that could not survive without her, then spent two years building one that could.
During those two years, she strengthened her leadership team, cleaned up the books, increased recurring revenue, developed a post-exit vision, joined nonprofit boards, restructured her tax plan, and modeled her future cash flow.
She also took her first genuine two-week vacation in eight years and the company still hit its numbers.
That was the moment she knew the business could continue without her.
Exit readiness is not a transaction completed at the closing table. It is the result of dozens of deliberate decisions made years earlier.
The business must be ready. The owner must be ready. The wealth plan must be ready.
Score all three legs this quarter. Whichever one is lowest should become your next priority.
The best time to start may have been ten years ago. The second-best time is now.
Listen to the Episode
Listen here: https://tinyurl.com/FBO2BO
Watch on YouTube: https://tinyurl.com/FBO2BOYouTube
00:00 Why Good Deals Still Bring Regret
RYAN MCGARGHAN
Three out of four owners who sell regret the decision within 24 months. Not because the deal was bad, because they weren’t ready. They engineered the business to be sellable, they had no idea who they’d be after, and they had no plan for the money.
Three legs on the stool, most owners build one, then they sit down.
JON DYER
Welcome to From Burnout to Bought Out, the podcast for business owners who are tired of being the hardest working, lowest paid employee in their own company. I’m Jon, joined as always by Ryan, and together we’ve spent years inside owner-led businesses helping founders go from running on fumes to running a business that actually runs without them.
Every episode, we break down the real problems nobody talks about, the burnout, the bottlenecks, the blind spots, and show you what it looks like to build a business that’s profitable, sellable, and doesn’t need you in the building every day to survive. Whether you’re grinding through a plateau, thinking about an exit, or just trying to take a vacation without your phone blowing up, you’re in the right place. Let’s get into it.
Is that Freedom Rock? Oh, wow, the in-the-air guitar. All right, so, again, my disclosure: composite stories are on the episode, every detail. Three legs on the stool.
01:51 The Three Legs of Exit Readiness
RYAN MCGARGHAN
Leg one, the business is ready. Leg two, the owner is ready. Leg three, the wealth plan is ready.
If any one of them is short, you wobble. Sometimes, the stool just tips. Most owners spend 80% of their planning energy on leg one.
EBITDA, multiples, data room, growth story. They spend almost nothing on leg two themselves. Who they are after the closing, and the emails stop coming in.
They spend even less on leg three, the wealth plan. What happens to the check after they sign it? Whether it lasts. The Exit Planning Institute reports roughly three out of four owners who sell regret the decision within 24 months.
Not because the deal was bad, because they weren’t ready. The wrong legs were strong. The wrong leg was missing.
Two owners, same year, same $6 million business, same industry. Owner A, leg one at nine. Leg two at three.
Leg three at two. Sold clean, on time, on multiple. Sat in his kitchen on a Tuesday, 18 months later, asking his wife what he was supposed to do with the rest of his life.
She didn’t know either. Owner B, leg one at seven when she started, nine at close. Leg two at four at start, eight at close.
Leg three at three at start, eight at close. Sold in 24 months, different exit, different life on the other side. The difference wasn’t the deal, it was the legs.
JON DYER
Nice legs, nice legs. Great games. Leg one, what does the business is ready mean? In plain language.
03:49 Is Your Business Ready to Sell
RYAN MCGARGHAN
Three words. The buyer can take it over and the value travels with the transaction. Word number one, predictable.
Clean financials, fast close, 13 week cash forecast, a scorecard that warns you before things go red, cash discipline, capacity guardrails. Word two, transferable. It runs without you.
Owner dependency index low, documented processes, a leadership team already running the day to day. Third word, de-risked. Customer concentration under 20%, key person risk addressed, contracts in place, recurring revenue when possible.
Every gap in those three becomes a buyer discount. Quietly, then loudly. The buyer’s diligence team is paid to find them.
$6 million service business, one client at 43% of revenue. Buyer didn’t walk, just dropped the offer by a full turn of EBITDA. $900,000.
One data point, one customer, cousin Vinny, same business, different price. Leg one is what most owners optimize. It’s the leg they know how to work on.
It’s the leg their advisors know how to charge for. It’s necessary. It’s just not sufficient.
And it’s the reason 75% of exits still end in regret because owners think leg one is exit readiness. It’s only a third of it. Hopping around on one leg.
JON DYER
Let’s go straight into leg two. The one you keep saying is the hardest. Walk us through it.
05:36 Are You Personally Ready to Leave
RYAN MCGARGHAN
It is the hardest, John. And it’s the leg that breaks the most exits. Four dimensions.
If any is blank, you’re not ready, regardless of the offer. Identity. Can you answer what do you do without mentioning your company? For most founders, the answer is no.
If the business is your entire identity, your baby, selling it feels like a death. Purpose. What gets you out of bed on Monday when the business doesn’t need you? Board seats, mentoring, a new venture, philanthropy, the cooking show your spouse secretly wanted you to have? You need a destination, not just a departure.
Structure. How do you spend your days? Not in general, actual Tuesday, 10 a.m., what are you doing? I’ve watched golfing, right? Well, golfing and drinking at the bar is not an option. It’s not a retirement plan, according to my wife, right? I’ve watched owners go from 60-hour weeks to what do I do with Tuesday in less than a month.
Relationships. Most of your closest relationships probably exist inside the business. Employees, clients, vendors, the same coffee shop three times a week.
Post-exit, that world shrinks overnight. If you haven’t invested in relationships outside the company the silence is deafening. Story, it’s a real one.
Composite name, real pattern, the whole shebang. Owner sold a clean $8 million exit at 68, sat at home for six months, then bought a smaller, worse business in the same industry just to have something to do. Now, he’s 70 years old, running a job he doesn’t need because he didn’t plan leg two.
This isn’t therapy talk. This is a leg where 75% of exits die. It’s the most important business problem in the room.
It just doesn’t look like one because nobody bills for it.
JON DYER
Okay, before we jump into that important third leg, let’s take a quick break. This episode is brought to you by Upstate Doors, Waddington, Malone, New York.
If you’re up in the North country and you’re staring at a garage door from 1994, this is the one.
RYAN MCGARGHAN
That was smooth.
JON DYER
Unlike Upstate Doors, we’ll get it smooth the first time, right, with full new installations, residential, commercial, CHI and Raynor product lines, which are the two brands people actually respect in this category.
I have a property up that way and my door has been the same wood look laminate since I met my wife. I have opinions that I do not share out loud.
RYAN MCGARGHAN
That is the door you replaced, the one that shaved 8% off the appraisal without anyone saying so.
JON DYER
Custom carriage style doors, if that’s the aesthetic, insulated if you’re paying to heat the garage every winter, 3D preview before you commit, which is part of it that separates the pros from the catalog people. 35 years in business, 80 years of accumulated expertise on the crew. Anniversary promo right now, save up to $250.
Upstate Doors, 315-388-5523, upstatedoors.com. Replace the wood look laminate.
RYAN MCGARGHAN
It’s time, John, because I can’t replace my post. I feel like wood look laminate 90% of the time.
JON DYER
8% reduction off the appraisal value. Ah, there we go. All right, that all important third leg, the third leg that we all want, the wealth plan, walk me through it.
09:32 Build the Wealth Plan Before Closing
RYAN MCGARGHAN
Some of us have it. Almost every owner’s net worth is trapped inside the business, right? House, 401k, savings. Those are honestly rounding errors next to the enterprise value.
So the wealth plan is the answer to the one question. When this thing turns into a check, what does that check do? After tax math first, the headline number is gross. You got federal tax, state tax, transaction costs, advisor fees, escrow holdbacks, earn out structures, contingent payments.
The net is often 25 to 40% below the headline. You should know that number before you sign an LOI, not after. Then what does the net fund? Lifestyle, philanthropy, the next venture, family wealth transfer, the years long boat you’ve been threatening to buy for a decade.
Then how does it stay alive? Investments, how’s your risk tolerance now that you’re not a private business owner with consistent cashflow? Most owners overrate risk after exit because they made their money taking it. The math on the other side is different. You made your money taking risk, you keep it by not taking it.
Pre-sale tax planning is the most expensive leg to ignore. Entity restructuring, basis tracking, charitable strategies, trust structures, QSBS if it applies to you. These take years to set up and produce six and seven figure savings at the closing table.
Six months out is too late. Two years out is the minimum, five years is even better. I’ve watched owners save more on the tax leg of the exit than they made in the last three years of running the business.
They started planning early. I’ve also watched owners pay full freight because they started tax planning the week the LOI showed up. It’s way too late.
JON DYER
That was a seven figure Tuesday. Holy smokes, that’s why we always say begin with the end in mind.
RYAN MCGARGHAN
You got that right, it’s a great saying.
JON DYER
Don’t know who came up with that.
RYAN MCGARGHAN
Some really handsome dude with a third leg.
12:04 Find Your Wobbly Exit Leg
JON DYER
He’s true.
It’s moving swiftly on. Okay, owners listening. How do they figure out which leg is theirs, of theirs is the wobbly one?
RYAN MCGARGHAN
So you gotta be honest when you score, right? One to 10 on each leg.
Yourself first, then with someone who’ll tell you the truth, right? Not your accountant, not your team, someone with no financial interest in the answer. Okay, leg one signals. Books close in over 15 business days.
Your ODI or your owner dependency index above seven. It’s a callback to episode nine, you are the bottleneck. Customer concentration above 20%.
We’re talking Cousin Vinny again. No 13 week cash forecast. No documented core processes.
Any of those, leg one is short. Leg two signals. You panic at two weeks without checking email.
You can’t describe a normal Tuesday post exit. Your closest friends are all your employees, customers or vendors. You’re in your 50s or 60s with no answer to what’s next.
Leg three signals. You don’t know your after-tax exit number. You haven’t talked to an estate or tax planner in two years.
Your entity is the same one you set up in year one. You haven’t met with a wealth advisor about post exit cashflow. Score each leg honestly.
Whichever is lowest is the one that gives out under load. Most owners are an eight, a four and a three. They’ve engineered the business to be sellable.
They have no idea who they are after and they have no plan for the money. Eight, four, three is the average owner. If those numbers describe you, welcome to the club.
It’s a big club. It’s also the club that produces the 75% regret rate.
JON DYER
Right.
I think I know how I can spend the money. That’s for sure. How long will it last is the question.
RYAN MCGARGHAN
That’s true. Well, it depends on how expensive the golf club is.
14:15 What Ignoring Each Leg Costs
JON DYER
Yeah, or how many you go to.
Yeah, true. So owners are gonna say, right, I’ll fix leg one first and I’ll deal with the rest later. What does it cost them?
RYAN MCGARGHAN
The cost of ignoring leg two is regret.
Real, expensive, lasting regret. The 75% statistic. Buyer’s remorse.
Selling and trying to buy back. Selling and going quiet for six months. Selling and starting a worse, smaller version of the same business 18 months later.
Because you can’t sit still and nobody told you what to do without the sitting. Cost of ignoring leg three is dollars. Often a lot of them.
Suboptimal tax structure at sale. That’s five to 15% of the deal loss of taxes you could have legally avoided. On a $10 million exit, John, that’s 500 to $1.5 million that you gave to Uncle Sam for no reason whatsoever.
Left on the table on purpose because you didn’t plan. Wrong post-sale investment posture, right? Market correction wipes out 20% of your proceeds in year one of things that you couldn’t control because nobody rebalanced you from private business owner risk to preservation. You don’t have an estate plan, no trust structures, no charitable strategies.
The IRS gets a check that should have gone to your kids or your foundation. And the IRS never sends a thank you note, but they’ll send a collections agency after you, right? Leg one mistakes cost you a turn of EBITDA. Leg three mistakes cost you a third of the proceeds.
Leg two mistakes cost you the version of yourself you were supposed to become. If you can only run one leg per year, run them in this order. Leg one first, year one.
Leg three second, year two. And leg two third, year three. Not because leg two matters least, it’s because it takes the longest and needs the runway.
Three years of legs or one year of exit and 20 years of regret. Pick one. All right, quick break, John.
JON DYER
This episode has been the most emotionally serious one in a while.
RYAN MCGARGHAN
It has.
JON DYER
I’m holding back my post-exit plan.
RYAN MCGARGHAN
Which is?
JON DYER
Play-by-play announcing for the Deer League hockey team in my town. I will not be explaining the math. That’s my one.
RYAN MCGARGHAN
That’s your one.
JON DYER
That’s my one. Brought to you by Upstate Doors, new garage door installations across the North Country.
And here’s my honest pitch. Replacing a beat-up garage door does more for a curb appeal than almost anything else you’ll spend the money on. It’s the largest single visual element on the front of most houses.
Get it wrong, everything looks tired. Get it right, the whole property pops. Full range of styles, traditional, contemporary, custom carriage style if you want to look without the horse.
And the insulated options are the ones people forget matter. Heated garage, workshop, anything commercial. Insulated door pays for itself.
On a house you might eventually sell, insulated is a diligence bullet you don’t have to explain.
RYAN MCGARGHAN
That is right.
JON DYER
Upstate Doors, Waddington and Malone, New York, 315-388-5523, upstatedoors.com. Currently running, if you’re listening to this within the month of July, 2026, we’ve got an anniversary promo for America’s anniversary.
Save up to $250 on your garage door install during the month of July.
RYAN MCGARGHAN
Wow, $250 for every year the US was established. I just got that.
JON DYER
I’m smart.
RYAN MCGARGHAN
A dollar a year. Inflation.
18:04 Why Exit Planning Starts Years Earlier
JON DYER
Yeah, that’s right. Alrighty, back to our program. How early does an owner need to start on all three legs?
RYAN MCGARGHAN
Earlier than feels reasonable.
To be honest with you, seven to 10 years before you want to exit.
JON DYER
Wow.
RYAN MCGARGHAN
I know.
Mostly our owners hear that and they’re gonna mentally file it under, well, someday, right? Then they call me eight months before the LOI drops. Why earlier matters? I’ll tell you this by leg. Leg one, get rid of your, you have customer diversification, you have a leadership bench, documented processes, recurring revenue.
These take three to seven years to mature. You cannot manufacture them in a quarter. Leg two, identity and purpose work take years.
You cannot decide what you’ll do post-exit in a weekend. You need to test it. Board seat, side project, volunteer role.
See what fits before you bet your whole calendar on it. Leg three, tax planning takes three to five years minimum to optimize. Entity restructuring, basis cleanup, trust set up, charitable lead trust.
None of these work as a fire drill. Minimum viability start is three years. Under three, you’re triaging.
You’re not planning. That’s fine. Sometimes triage is what you have, but name it honestly.
Quarterly exit lens inside your SOS rhythm, 30 minutes every quarter on a single question. Did anything this quarter move our exit readiness score across all three legs? 30 seconds in every weekly L10. Did anything this week move a value driver? Make it a routine, not radical.
The compounding does the work.
JON DYER
So just to repeat that, legs two and three take the same amount of time as leg one, as building the business and getting it ready. Two and three take just as much time.
RYAN MCGARGHAN
They certainly do. What do you wanna do with your life afterwards, right? It takes time to figure that out, John, and to get your plan in place. People need more hobbies.
JON DYER
They do. Exiting should be a hobby.
RYAN MCGARGHAN
Yeah, well, then I can tie all the flies that I want.
JON DYER
Fly fishing.
RYAN MCGARGHAN
There you go. Fly fishing and golf.
20:22 Who Should Lead Your Exit Team
JON DYER
So, okay, who quarterbacks all of this? Who’s actually running it? How do people get through all of this?
RYAN MCGARGHAN
So there’s usually four professionals. None of them work alone, and that’s usually the mistake people make, right? Leg one quarterback, your CFO or fractional CFO, and your integrator. Operational and financial readiness, data room, scorecard, capacity model, customer concentration report, they get you.
Leg two quarterback, you with help. Sometimes a coach, sometimes a therapist, sometimes a peer group, sometimes all three. This is the leg nobody bills for, which is why nobody works on it.
Leg three has two heads. A tax-aware planner or tax strategist on your planning side could be an enrolled agent or a CPA, and your wealth advisor on the post-exit deployment side. And if we’re counting a fifth one, ideally an estate attorney for the structures.
The conductor on top is a SEPA-certified exit planner or an M&A advisor with exit planning jobs. Somebody whose job is to make sure all four professionals are talking to each other, not in silos, and not just to you. Because here’s what happens without a conductor.
Your CPA optimizes last year’s tax bill. Your wealth advisor optimizes for assets under management. Your attorney optimizes for billable hours.
Your CFO optimizes for the next board meeting. Nobody is optimizing for the integrated exit. That’s what the conductor does.
That’s the seat you need to fill. Most owners don’t fill it until they’re 90 days from a closing they can’t undo, which is exactly when a conductor can’t help you anymore. If you can only hire one of them, hire the conductor.
They build the team around themselves. More importantly, around you.
JON DYER
Awesome.
Important. Last break, upstate doors. And this one is for the commercial audience because that’s the piece owners forget.
Warehouse doors, loading bays, shop doors on a light industrial building. You upgrade the office and forget the back of the building. Looks like it lost a fight in 1998.
This matters at exit. A buyer walks the property. Front of the building is fine.
They walk around the back. The commercial doors are rusted. The seals are shot.
One of them doesn’t close all the way. That’s a walking price cut. That’s a walking mullet.
Upstate does full commercial installations, new builds, retrofit, roll-up doors, same CHI and Raynor quality on the commercial side.
RYAN MCGARGHAN
And I’ll admit, I owned a commercial building for eight years and never once thought about the doors as a value driver.
JON DYER
Yeah, you used to have a mullet as well, I bet.
How is that going for you now, Ryan?
RYAN MCGARGHAN
You know, it’s business in the front and party in the back. The girls love it. So, but the building sold.
The doors are somebody else’s problem. But if I had to do it again, I would have replaced them in year six, not left them as a discount at closing. Upstate Doors, Waddington Malone, New York, serves the whole North country.
23:49 Elena Gets All Three Legs Right
JON DYER
315-388-5523, upstatedoors.com. Anniversary promo running now. Happy birthday, America. Okay.
Alrighty, Ryan, tell the story of somebody who got all three legs right. What did it actually look like?
RYAN MCGARGHAN
Well, her name was Elena. Changed the name, changed the industry, all that kind of stuff.
Composite, so eight years building a $4 million services firm, burned out. Couldn’t take two weeks off without the place wobbling. ODI, right, Owner Discretionary Index, north of nine.
She decided she wanted to be ready to sell in 24 months. Not committed to selling, just ready. That distinction matters.
Leg one, she got her SOS rhythm installed, leadership team built, capacity guardrails on marketing, books cleaned up with a fractional CFO. Diligence prep started 18 months before any LOI. Recurring retainer revenue went from 22% to a whopping 65.
Leg two, personal work started early. Post-exit vision on paper by month four. Two non-profit boards by month eight.
First real two-week vacation in eight years by month 12. And the business hit its numbers without her. That vacation was the moment she knew.
Her words, not mine. They didn’t need me. That’s when I stopped being scared of leaving.
Leg three, tax restructuring started in month three. Entity cleanup, basis tracking, donor advised fund opened in month five. Wealth advisor engaged in month six to model post-exit cash flow at three different exit multiples.
24 months in, revenue grew to 7.4 million. ODI dropped from 12 to two. Net margin at 21%.
Diligence took five weeks, not five months. Three competing offers. Her line, afterward verbatim, and I actually dug this out of a video.
I spent eight years building a company that couldn’t survive without me. I spent two years building one that could. The second project was worth 10 times more.
All three legs, not just the business. That’s the whole episode.
26:08 Choose One Quarterly Exit Rock
JON DYER
Compelling, really compelling.
Owner’s driving to work now, listening. What’s the move this quarter?
RYAN MCGARGHAN
Score yourself on all three legs honestly. Take 10 minutes, piece of paper, not in an app.
Handwriting slows you down enough to be honest. Leg one is the business predictable, transferable, de-risked, one out of 10. Leg two, am I ready as a person? Do I have identity, purpose, structure, relationships? Again, one to 10.
Leg three, do I know my after-tax number, my post-exit deployment plan, my entity and estate structure? One to 10. Whichever one is lowest gets your quarterly rock this quarter. Just one, not all three at once.
Owners who try to run all three at once, they pick three rocks, they finish zero. The point is finishing one, not starting three. If leg one is lowest, install the missing rhythm.
Pick one pillar from the seven and fix it. If leg two is lowest, write your post-exit vision on paper this month. One page, what do you do on Tuesdays? If leg three is lowest, schedule a meeting with a tax aware CPA or EA and a wealth advisor in the next 30 days.
Same meeting if possible. Watch them have to talk to each other for the first time. Run that loop quarterly for four quarters.
You’ll be a different owner in a year with a different exit available to you. In a quick look ahead, John, this is the first of a set that takes each leg on its own. The Windsor Circle is the leg two episode.
Sold for five million, the marriage almost didn’t survive. Same clean exit, same owner, and the Tuesday in the kitchen from our cold open. This time told all the way through.
The check clears, the wobble doesn’t. Leg three gets its own episode on tax architecture, and leg one gets one on the operational value drivers. Follow the show so the wobbly leg isn’t the surprise on the closing day.
JON DYER
We are not doing an episode on your third leg, are we?
RYAN MCGARGHAN
We most certainly not. We’ll bring in Wilt Chamberlain.
28:19 The Three-Legged Stool Takeaway
JON DYER
Good.
All right, Ryan, let’s skip to the takeaway.
RYAN MCGARGHAN
Exit readiness is a three-legged stool. The business has to be ready.
The owner has to be ready. The wealth plan has to be ready. Most owners pour everything into leg one because it feels like real work.
Then wobble out the closing day on legs two and three. The 75% regret rate isn’t about bad deals. It’s about unprepared people.
Score yourself on all three legs this quarter, whichever is lowest gets a rock. Run that loop for a year. The exit you take in three years isn’t decided in year three.
It’s decided in the quarters where you did the leg you kept avoiding. The best time to start was 10 years ago. The second best time is this quarter.
JON DYER
All right, that’s a wrap. Sayonara. Thanks, everybody out there.
RYAN MCGARGHAN
Oh, that’s for our Japanese listener again.
JON DYER
That’s right, adios. What’s thank you in Japanese?
RYAN MCGARGHAN
Arigato.
JON DYER
Domo arigato.
RYAN MCGARGHAN
There we go. And now you learn Japanese.
JON DYER
Yeah.
RYAN MCGARGHAN
These podcasts are so informative.
JON DYER
Yeah.
All right, peace out. That’ll do it for this episode of From Burnt Out to Bought Out. If anything we talked about today hit home, do us a favor, share this episode with another owner who needs to hear it.
And if you’re sitting there thinking they’re talking about me, good, that’s the first step. Head to the show notes and book a free triage call with our team. No pitch, no pressure, just a real conversation about where you are and what’s possible.
You can also find us on LinkedIn.
