During the decade I spent on the set of Shark Tank, I heard hundreds of pitches. They were all about beginnings—a brilliant idea, a new market, a plan for explosive growth. The energy was electric. But the single most important pitch an entrepreneur will ever make isn't for seed funding. It’s the final one. The one where you pitch the value of your entire journey to a potential buyer.
Of all the questions I’ve been asked over my career, the one that carries the most emotional weight is this: “Naomi, how do you know when it’s the right time to exit your business?”
It’s a question laced with ambition, exhaustion, fear, and hope. When you’ve poured your heart, soul, and every last dollar into building something from nothing, the idea of letting it go can feel like a betrayal. It’s your baby. But here’s the truth I’ve learned from my own journey and from mentoring countless founders: a successful business is an asset, not a life sentence.
The best entrepreneurs don't just build to start; they build to last. And often, building to last means creating something that can thrive beyond you.
I've lived this. I started RedBalloon in 2001 from my house with a $25,000 personal investment and a vision I was utterly determined to see through. For ten years, I was the CEO, obsessing over every detail. But a point came where I knew, with absolute clarity, that for RedBalloon to reach its next summit and for me to find my next chapter, I had to step back from the operational side. That transition wasn't an end—it was a strategic evolution that unlocked new potential and eventually led to the creation of Big Red Group, the largest experience marketplace in Australia and New Zealand.
Deciding to exit isn't a sign of failure. It is the ultimate sign of success. But it requires a plan. I recently dedicated an entire episode of my podcast to this very topic, because the 'when' and 'how' are so critical to get right.
I want to give you my ultimate guide. We’ll go deep on the signs it's time to move on, the practical steps to prepare your business for a maximum valuation, and the emotional journey of letting go.
Why You Need an Exit Strategy from Day One
Let’s reframe the entire conversation. An exit strategy isn't a parachute you pack when the engine fails. It's the destination you plug into your GPS before you even start the car.
When you begin with the end in mind, you make different decisions. You focus on building systems, not just sales. You focus on developing a leadership team, not just being the leader. You build an asset that someone else will want to buy, rather than just building a job for yourself.
Too many founders I meet in the early stages are so consumed by product and marketing that they forget this golden rule: if your business can't run without you, you don't have a business—you have a high-stakes, high-stress job. A potential buyer isn't looking to buy your job. They're looking to buy a well-oiled machine that generates profit.
Having an exit in mind from the start forces you to ask the right questions:
- Is this process scalable?
- Is our intellectual property protected?
- Is our financial reporting clean and transparent?
- Do we have a team that can carry the vision forward?
Thinking about your exit is the most powerful strategic tool you have for building a truly valuable company.
The Three Triggers: Unpacking the "When"
An exit is rarely a single, sudden event. It's a confluence of factors that build over time. I’ve found they almost always fall into one of three distinct categories: The Personal, The Business, or The Market. Let's explore each in detail.
1. The Personal Trigger: Your Energy, Passion, and Life Have Evolved
This is often the most powerful trigger, yet the one we feel most guilty about admitting. Your business is deeply personal, and so is the decision to leave it.
- The Fading Fire: Burnout and Shifting Passions
As I wrote in Live What You Love, our work must be fuelled by passion. Do you still get that jolt of excitement thinking about a new product line or solving a customer's problem? Or does the thought of another board meeting or budget review fill you with a sense of dread? Burnout is real. It’s not just feeling tired; it’s a deep, chronic exhaustion coupled with a sense of cynicism and detachment. When the work that once gave you energy now only drains it, that is a signal you cannot ignore. Your business deserves a leader with fire in their belly. If that's no longer you, it's an act of leadership to find someone who does. - Life Happens: The Personal Balance Sheet
Life is not static. You might be facing health challenges, either your own or a family member's. You might have young children and want to be more present, or grown children and want the freedom to travel. Your personal priorities shift. The sacrifices you were willing to make at 30 might not be the same ones you’re willing to make at 50. There is no shame in this; it’s human. Acknowledging that you want a different lifestyle is not a failure of ambition, but a redefinition of success. - Outgrowing Your Role: The Founder's Paradox
The skills that make someone a brilliant start-up founder are often the opposite of what’s needed to run a mature, scaled-up company. A founder thrives in chaos, wears a hundred hats, and makes decisions on gut instinct. A CEO of a large company needs to be an expert in governance, process, and managing managers. I loved the scrappy, hands-on, creative phase of RedBalloon. But as we grew to nearly 50 employees, the role changed. It became less about creation and more about administration. It's crucial to be self-aware enough to ask: "Am I the best person to lead this company today?" If the answer is no, your job as founder is to find the person who is.
2. The Business Trigger: The Company Is Ready for Its Next Chapter
Sometimes, the signals come not from within you, but from the business itself. A healthy business has its own lifecycle, and it will tell you when it’s ready for a change.
- Hitting the Glass Ceiling: The Growth Plateau
Have your revenue and profit figures stagnated for the last few quarters? Do you feel like you’ve squeezed every drop of growth out of your current market with your current resources? Every business hits growth plateaus. Breaking through them often requires a massive injection of capital, access to international markets, or a distribution network that you simply don’t have. Selling to a larger strategic partner can give your business the fuel it needs to smash through that ceiling and reach the next level—a level you couldn’t reach on your own. - The Business Matures: Building Yourself into Redundancy
This is the founder's dream. You've successfully built robust systems, documented your processes, and, most importantly, developed a strong leadership team that can run the day-to-day operations without your constant input. If you can take a four-week holiday without your phone ringing off the hook, you haven't just built a business—you've built a saleable asset. Your job as the visionary and creator is done. The business has matured, and your role has naturally become redundant. This is a moment for celebration, and a perfect time to realise the financial value of your hard work. - Navigating the Storm: Unavoidable Market Shifts
Industries are in constant flux. A new technology emerges, consumer behaviour radically changes, or a massive, well-funded competitor enters your space. You're now facing a "pivot or perish" moment. Do you have the capital, the technology, and frankly, the energy to fight a new war? Sometimes, the most strategic move is to be acquired by a company that is better equipped for the new landscape. This was a key driver in creating Big Red Group. We saw the experience economy consolidating and knew that combining forces with other great brands like Adrenaline and Experience Oz would create a powerhouse that was far stronger than the sum of its parts.
3. The Market Trigger: An Opportunity Too Good to Ignore
Finally, sometimes the decision is taken out of your hands by external market forces. Being prepared to act on these triggers is the difference between a good exit and a great one.
- The Knock on the Door: The Unsolicited Offer
When a competitor, a larger company in an adjacent industry, or a private equity firm proactively approaches you with an offer, pay attention. It's the ultimate market validation that you've built something of significant value. Even if you weren't planning to sell, you owe it to yourself and your shareholders to give it serious consideration. This is why having your house in order at all times is so crucial—you need to be able to respond to opportunity when it knocks. - Riding the Wave: Hot Industries and Consolidation
Every industry goes through cycles of M&A (Mergers & Acquisitions). If you see a wave of consolidation happening in your sector, with competitors being bought up left and right, it's a clear sign that valuations are high. It's a "seller's market." Selling when your industry is hot can add millions to your final price. Waiting until the wave has passed could mean accepting a much lower offer later on. - The Economic Climate: Timing the Market
Broader economic factors play a huge role. When interest rates are low, money is cheap for buyers, fuelling acquisitions. When investor confidence is high, private equity firms are on the hunt for strong, profitable businesses to add to their portfolios. Keeping an eye on these macroeconomic trends can help you time your exit to perfection.
The "How-To": My In-Depth Guide to Preparing Your Business for Sale
You wouldn't sell a house without cleaning it, fixing the leaky tap, and applying a fresh coat of paint. Selling your business is a thousand times more complex. This is the work that separates a multi-million dollar exit from a deal that falls apart in due diligence.
Module 1: Financial Fortification
This is the bedrock of any sale. No excuses.
- Impeccable Record-Keeping: You need at least three, preferably five, years of clean, professionally prepared financial statements (Profit & Loss, Balance Sheet, Cash Flow).
- Get it Audited: For a significant sale, having your financials audited by a reputable accounting firm provides an enormous level of credibility and can speed up the due diligence process significantly.
- Calculate Your "Real" Profit: Buyers value a business based on its earnings, most commonly EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation). Work with your accountant to "normalise" your earnings by stripping out any personal expenses you’ve been running through the business (like cars or personal travel) and any one-off costs or revenues that aren't repeatable. This gives a true picture of the business's profitability.
Module 2: Operational Excellence & Systemisation
You are selling a system, not a personality.
- Document Everything: Create a comprehensive set of Standard Operating Procedures (SOPs). How do you onboard a new client? How do you process an order? How do you handle a customer complaint? Every key process in your business should be documented so that a new owner can understand it.
- Invest in Technology: Have you got a solid CRM (Customer Relationship Management) system? Is your inventory management or project management software up to scratch? A business that runs on modern, efficient technology is far more attractive than one held together by spreadsheets and sticky notes.
- The Four-Week Holiday Test: This is my ultimate test. Can you genuinely disappear for a month and the business continues to run smoothly? If not, identify the dependencies on you and start building systems and delegating to remove them.
Module 3: Legal & IP Armour-Plating
This is where deals often die. Don’t let it happen to you.
- Get Your Contracts in Order: Ensure all your key customer contracts, supplier agreements, and employee contracts are current, signed, and organised. If you have a physical location, review your lease agreements.
- Protect Your Intellectual Property: Your brand is one of your most valuable assets. Is your company name, logo, and any key product names trademarked? Do you own all the relevant domain names? If you've developed proprietary software or technology, have you considered patents? A buyer is paying a premium for your unique position in the market, which is defended by your IP.
Module 4: Develop Your A-Team
A business is only as good as its people.
- Build a Strong Second-in-Command: Identify and empower a management team that can lead. A buyer will be hugely relieved to know that there's a capable team that will likely stay on after the founder leaves, ensuring a smooth transition.
- Secure Key Staff: Consider implementing employment contracts and incentive plans (like bonuses tied to the sale) for essential employees to ensure they don't get nervous and jump ship during the sale process. The loss of a key sales director or head of technology can devalue your business overnight.
Module 5: Know Your Worth – The Art and Science of Valuation
Don't go into a negotiation blind.
- Hire a Professional: Don’t rely on a rule of thumb you heard from a friend. Engage a professional business broker or corporate finance advisor to perform a formal valuation. They use established methodologies (like EBITDA multiples for your industry, or discounted cash flow analysis) to give you a realistic range of what your business is worth.
- Understand What Drives Value: It's not just profit. A buyer will pay more for a business with recurring revenue, a diverse customer base (no single client is more than 10% of revenue), a strong brand, and a significant competitive moat. Identify your strengths and be prepared to articulate them.
The Final Step: Preparing for Your Own "What's Next?"
We've talked about preparing the business, but what about preparing you? Selling the business you created is a profound emotional journey. For many founders, their identity is completely intertwined with their company. The sale can leave a massive void, a feeling often called the "Founder's Blues."
This is why, as I wrote in Ready to Soar, you need a plan for your own life. What will you do the day after the deal closes and the money is in the bank?
- Will you travel the world?
- Will you pour your energy into philanthropy, as I have with Voiceless and the Cerebral Palsy Alliance?
- Will you become an angel investor or mentor for the next generation of entrepreneurs?
- Will you write that book you've always dreamed of?
- Will you simply rest and rediscover who you are without the title of CEO?
Having a clear vision for your next chapter is essential. It provides purpose and excitement, transforming the exit from a sad ending into an exhilarating new beginning.
An Exit is a Graduation
Thinking about leaving the business you built is one of the toughest challenges you will ever face. But I want you to reframe it. It is not an abandonment. It is a graduation. It's the moment you get to see the full value of your years of hard work, risk, and sacrifice realised. It’s the final, triumphant act of a successful entrepreneurial story.
You owe it to yourself, your family, and the business itself to plan for it with the same rigour and passion you had on day one.
