How to Build a Business Exit Strategy That Maximises Your Valuation

Most business owners think about their exit properly for the first time on the day they decide they have had enough. By then the choices have narrowed to whatever offer happens to turn up. The price reflects it.

Simon Bedard has spent his career on the other side of that table. He values businesses, prepares them for sale and watches what experienced buyers actually reward. In this episode he walks Dave through his Value 360 model, explains why the sharpest buyers ask for boring businesses and shows why a good business exit strategy is really just a plan to build a better company. If you want the version of your business that a buyer pays a premium for, hit play.

In This Episode

• 01:45  The exits Simon has been through himself
• 03:45  Why owners really sell, from crisis through to windfall
• 05:45  Why “plan your exit before you start” doesn’t hold up
• 07:30  Reverse engineering the runway you actually have
• 10:45  The value equation and the lever most owners ignore
• 12:00  Why the most experienced buyers ask for boring
• 14:45  Concentration risk and the deal that died three weeks out
• 19:15  The five buckets inside the Value 360 model
• 24:45  How AI is entering the valuation conversation
• 31:30  The owner who wanted out, stayed, then sold for 18 million

👤 Today’s Guest, Simon Bedard

Simon Bedard is Managing Director of Exit Advisory Group, an advisory firm with offices in Sydney, Melbourne and Perth that helps owners prepare for and complete the sale of their business. Behind that sit more than 20 years in finance and investment, plus several companies of his own that he started, bought and exited, including one he walked away from after discovering a business partner was stealing.

He is a Registered Business Valuer, a licensed business broker, National Chair of the Australian Institute of Business Brokers and the author of Exit Like an Expert. His podcast, Buy Grow Sell, has owners talk through what their own transactions were really like. Dave met him some years back and later spoke at his Buy Grow Sell summit.

Website: exitadvisory.com.au

📋 The Value 360 Framework: What Buyers Actually Pay For

Based on the interview with Simon Bedard, Managing Director, Exit Advisory Group.

Simon has seen exits at both ends of the range. One he sold because the timing felt right and the numbers were good. Another he walked away from after a partner turned out to be stealing. A small tech business simply ran out of fuel. Here’s how he describes the difference.

“you’re on that journey, you’re on the highway. And sometimes there’s just obvious exit ramps that allow a good, clean, simple exit as opposed to not thinking about this till the last minute and going, ‘I want out,’ and just turning into the wall.”
Simon Bedard, 03:00

Most owners turn into the wall. They are burnt out, tired out and done. Only then do they ask whether anybody wants to buy the thing. Simon sees the whole bell curve, from partnership breakups and health crises at one end through to the owner who has been approached out of nowhere with a big number and no idea what to do next. The people in the middle, the ones who get the best result, are simply the ones who accepted early that everybody exits one day and decided to have a plan for it.

Why a Business Exit Strategy Starts Three Years Out

There’s an old adage that the best time to plan your exit is before you get started. Simon doesn’t sit in that camp and he’s clear about why. In the early days you’re chasing proof of concept, working out how to get a customer to pay you something and trying to get the business to wash its own face. An exit conversation there isn’t realistic.

It becomes realistic once the business runs, revenue is consistent and there’s a bit of profit showing. That’s the moment for a genuine check-in with yourself: am I enjoying this, do I have the energy for it, how long do I actually want to keep doing it?

Then reverse engineer the answer. Simon described a call he had taken the day before the interview. The owner said he was happy to keep going but wanted to stop completely in three years. Simon walked him through the arithmetic. A transaction takes around 12 months on average. Given the nature of that owner’s role, a buyer would expect him to stay in the business for a minimum of a year and more likely two. So a three-year horizon means starting right now. It also means there isn’t much time left to fix anything. That’s prep for a transaction, not improvement of a business.

His rule of thumb: three to five years out, start taking active steps.

The Two Levers Behind Every Valuation

Strip a business sale back to its simplest form and a valuation is a financial metric, usually profit, multiplied by a number everyone calls the multiple. Simon’s point is that most owners spend all their energy on the first half of that equation. They decide the way to grow the value of the business is to double sales. Then they look at what it took to get this far and quietly give up.

There are two levers here, not one. The financial metric is largely what it is. The multiple is the one you can move. Moving it doesn’t require you to sell a single extra thing.

Simon illustrated it with two companies. Both turn over $5 million. Both make $1.5 million profit. Both are in the same industry doing the same work. Worth the same? Most people say probably. Then he adds that Company A has grown consistently by 10 to 15% every year for the last ten years, while Company B has zigzagged, made a loss last year and has bounced back to that same $1.5 million this year. Still the same? And then the detail that settles it: Company B’s largest customer is 62% of its entire revenue.

Buyers Want Boring

What a buyer is really asking, underneath every question in due diligence, is whether this company will keep producing revenue and profit once you’re gone. History is lovely. The trophies on the wall are lovely. Simon’s verdict is that buyers don’t care about any of it. They care about reliability.

“the most professional, experienced buyers come to me and go, ‘Give me the most boring business you’ve got. I want boring.’ Because they know boring makes money.”
Simon Bedard, 12:15

So the questions become mechanical. How reliably does your business generate leads? How reliably does it sell? How reliably does it deliver? Can you measure any of it?

Simon described one client, marketing professionals through and through, who had every channel defined: what they spend, their conversion rates, cost of customer acquisition, customer lifetime value, plus the point at which a channel saturates and starts to drop off. When the buyer arrived, the owner didn’t have to sell anything. He said here’s the model, let me show you how the metrics work. Simon watched the buyer’s eyes light up. What went through that buyer’s head, in Simon’s words, was “Oh my God, I can do this.”

Contrast that with the far more common answer: the business just makes money, we get leads because we’ve been around a long time, we get a few referrals. As Simon puts it, that’s not a system. That’s hoping it keeps working without knowing how it works.

The Risks That Quietly Cost You Money

Two risks come up again and again. Both are fixable years before a sale.

The first is key-person risk. Does somebody hold the special sauce in their head, in a way that isn’t applied consistently across the business? What happens if that person leaves? Often that person is the owner, which is exactly why the work of documenting how things are done and then removing yourself from the day to day shows up directly in the price.

The second is concentration risk. Simon sees it constantly. What portion of your revenue is your largest customer? Over 15%, he starts asking questions. Over 25%, he has alarm bells going off.

He then told the story that should make every owner check their own numbers. A client’s biggest client was 93% of revenue. Simon spent five years trying to convince him to do something about it and got nowhere. He took the business to market anyway, found two buyers, had a written offer and was three weeks from closing. Then that customer cancelled his contract. Not just the deal gone. The business gone.

The reason these things sit undone isn’t laziness. It’s perspective. Simon has a good analogy for it: someone terrified of flying walks across the tarmac next to the pilot. The risk to both of them is identical while the perception of that risk couldn’t be more different. Owners are on the inside looking out, hardwired for growth and opportunity. Investors are on the outside looking in. They’re thinking about risk.

“if there’s risk and opportunity, but if you don’t know what’s going on in your business, how the hell are you gonna know if it’s a risk?”
Simon Bedard, 18:15

Which brings him to the dashboard. You can’t mitigate every risk. Nobody expects you to. But what gets measured gets managed. A dashboard tracking customer concentration, supplier concentration and staff dependency lets you see a problem while it’s still small. Sitting above that, Simon puts what he calls the owner’s dashboard, holding the one number he’d pick if he could only have one: your business valuation. Turnover flat this year but the valuation up from $2 million to $2.5 million means you drove real value into the business without adding a dollar of sales.

The Five Buckets Inside Value 360

Simon’s firm uses a model called Value 360, which sorts everything that drives the multiple into five buckets, each with sub-buckets underneath.

Ask an owner about the growth system bucket and the conversation goes somewhere familiar. What’s your sales process? What do you mean? Well, a lead comes in, what happens? Oh, probably give them a call and have a chat. That’s not a system. You can’t replicate quality from it.

Dave made the observation that ties the whole model together: every one of these value drivers traces back to a system or a process.

“a lot of those different value drivers you mentioned, I can keep tracing back to the system or the process. It’s just about getting super clear around the way the business works and the results that it delivers so that there are no cobwebs hiding or skeletons that are gonna scare away a potential buyer.”
David Jenyns, 15:45

This is why Simon rates the work. Systemising is exactly the sort of important, non-urgent job that sits on the to-do list for years. The payoff isn’t just a business that runs better. It’s a business worth more, without necessarily driving sales at all. That’s the case the SYSTEMology framework has always made. Hearing it from the person who writes the valuation is a useful confirmation.

Culture Is the Thing Money Cannot Buy

Simon once asked the CEO of a large, well-known private equity firm in Sydney a simple question. Assume the numbers stack up and every key metric is met. After the financials, what matters most when you buy a business? The answer came back immediately: management team and culture.

The reasoning is practical. That buyer doesn’t want to run the business. He needs to know it’s run by competent people who have a good culture, because culture isn’t something he can throw a few dollars at and change. It takes time and a whole set of inputs he can’t shortcut.

Simon’s own definition of culture is the way we do things around here, which is almost word for word how Dave defines it. And here’s where documentation stops being administration and starts being an asset. When the systems exist, you’re not just telling a new person how things are done here. You’re showing them, with a checklist and a video they can watch when they have time.

Dave’s framing is that a process is a documented habit. You’re new, you don’t know how we do things yet, so follow this until it becomes a habit. At that point it simply is the way you work. The proof it has taken hold is when you hear one team member say to another, in their own words, that’s not the way we do things here, let me show you the standard. High performers do that willingly, because high performers want to work with other high performers.

Where AI Sits in the Valuation Conversation

AI is already part of the assessment. The question buyers ask is direct: will AI eat your lunch? If the answer is yes and you have no response, they’re not buying. If they want one specific part of what you do and not the rest, you have a different problem, because you’re asking them to pay for both halves while they only value one.

Simon’s own view of AI is enthusiastic and unsentimental. He calls it the greatest impactor on productivity since the computer came into play. In the same breath he admits to arguing with ChatGPT on weekends for lying to him. It’s good for content and for running the basic processes it’s currently designed for. It can do financial analysis, but you’d better double-check the answers.

One of his clients, a lawyer by trade, described how it plays out in law. Anything rules-based, case law, if this then that, clearly defined outcomes, AI will probably resolve 90% of a dispute, then hand the complicated 10% back to a human. Simon sees his own sector the same way. Simple processing and matrix-based decisions are a no-brainer. The part where a client is telling him about a son who has been taking drugs for five years, about the family, about the employees whose weddings he has been to, about needing to get out with no idea how to manage any of it: AI can’t answer that.

Dave brought up a framework a friend of his used to teach, 10/80/10. You do the first 10%, the team does the middle 80%, you come back for the final 10%. For a lot of work now, that middle 80% is the machine. You brief it, it does the bulk, you tighten and tidy for delivery. Simon agreed, with one warning attached: don’t be lazy, do the last 10%, because skipping it is how Deloitte got caught out.

Fix the Business Before You Sell It

Simon closed on a story about a client he valued six years ago at around $10 million. The owner wanted to sell. There was a lot in there that wasn’t working and he was simply over it.

After a long conversation, Simon put it to him plainly. He didn’t think the man really wanted to sell. He had two or three big problems he couldn’t seem to solve, he’d hit the end of the road and selling was just the fastest exit from those problems. The owner said that was exactly how he felt.

Simon’s response is the part most advisers would never give you. He said he could sell the business, that it’d be a lucrative piece of work for his firm and he’d be happy to do it. Then he asked why they didn’t just fix it instead. The business turned over $30 million and made $5 million a year in profit. This wasn’t that hard.

Most of the fix came down to systemising the components that kept dragging the owner back in, so the business no longer needed him in the day to day and he stopped being badgered with questions that frustrated him. Three years later the two of them were having lunch in Sydney and the owner said he couldn’t see himself selling any more. He was working two days a week. He’d taken up surfing again. He did eventually sell, about a year before this interview, for $18 million.

“some of the things you might think are boring or less urgent actually make everything else work better.”
Simon Bedard, 31:15

And there’s the irony Simon points out at the end. The moment your business is running well without you, profitable and predictable, is exactly the moment people start knocking on the door asking whether you want to sell.

Nothing in this conversation is advice you’d refuse if you never sold a thing. Know your numbers, spread your risk, get the knowledge out of people’s heads and build a business that keeps running when you’re not in the room. Do that and the exit takes care of itself. Your business isn’t broken, your systems are, which is a much better problem to have.

Wondering where to start? Simon says buyers pay for reliability. Here is Dave on which systems to build first and why documenting everything is the wrong move.

Frequently Asked Questions

When should I start working on a business exit strategy?
Simon’s answer is three to five years before you want out. Not day one, not the year you decide you’ve had enough. Once revenue is consistent and there’s profit showing, that’s the point to ask how long you want to keep doing this and start taking active steps.

Do I really need an exit plan from the very beginning?
Simon says no. He’s deliberately contrarian about it. Early on you’re proving the concept and trying to get the business to break even. An exit conversation at that stage isn’t practical or logical for most people.

What raises the multiple if I can’t easily raise profit?
Consistency and evidence. Buyers want to see that the business reliably generates leads, sells and delivers, with metrics to prove it rather than a story to tell. Documented, repeatable processes are what turn the story into evidence.

How much revenue from one customer is too much?
Over 15% and Simon starts asking questions. Over 25% and he has alarm bells going off. He shared a client whose largest customer made up 93% of revenue, then cancelled three weeks before settlement, which cost that owner the deal and the business.

How is AI affecting what my business is worth?
Buyers are openly asking whether AI is going to eat your lunch. If it will and you have no answer, they either walk or discount hard. On Simon’s own side of the table AI is already in day to day use, with buyers running it over data rooms for insight.

What if I never want to sell?
Then you get the better half of the deal anyway. Simon’s client fixed the problems instead of selling, went to two days a week and took up surfing again. He sold years later for $18 million, but by then it was a choice rather than an escape.