Sam Penny (00:00)
ladies and gentlemen, welcome to built Buy And the topic for today is the seller's exit plan and what that reveals, but also why it matters so much to you. So if you're thinking of buying a business or you're already in talks, this session is going to show you how something that most people, I'll tell you what they honestly overlook this.
they never look for and even fewer people know how to interpret. And that is the seller's exit plan because here's the truth that most buyers miss. The seller's exit plan or the lack of one, it's like an X-ray. It reveals how prepared they are, how much they've thought it through, and most importantly, how much risk you're going to be inheriting. Is there a clear handover timeline or are they emotionally ready to let go?
Do they know what their team, what they need or, particularly once they're gone, or are they just saying, I want out with no roadmap behind it. So this is where so many smart buyers get blindsided because the numbers can look great. The growth can look solid. The business might even feel exciting, but if the seller isn't clear, if they're not consistent or structured about their own exit,
It's often you the buyer who ends up carrying the chaos. So in today's session, I'm going to show you how to read the signals, ask the right questions and spot what the sellers are really telling you, even if they don't mean it. So let's dive in.
All right, now before we get into the tactical stuff, I just want to give you a quick sense of why I run this series and why this topic matters so much to me. You see, I've been on both sides of the deal table. I've bought and sold businesses, including my own seven figure companies. I've coached investors and acquisition entrepreneurs who stepped into incredible opportunities and
I tell you what, if you need disasters, what I've learned from the inside is that most of the real risk in buying a business isn't found in the P and L and it is in what's not said. It's in what the seller assumes you won't notice. It's in the handover plan that looks like a handshake and a hope. It's in the emotional signals they send the ones that tell you whether they're truly ready or maybe they're just desperate to get out.
So this series is built to expose those blind spots to help you think like a deal maker, not just a dreamer, because buying a business is one of the biggest bets you'll ever make. And if you're not reading the seller correctly, you're walking in with less information than they are. And that's honestly a really dangerous place to be. This isn't about making you suspicious. It's about making you sharp.
Now, if this is your first time joining me, welcome. If you've been with me before, you already know this is a series designed to help you buy better, not just smarter on paper, but more aligned in practice because the business you buy will shape your time. It'll shape your energy, your decisions and your lifestyle for years to come. That's why I created this series, the Built to Buy, Built to Sell podcast every week.
a sip with buyers, founders, brokers and advisors who've seen the good, the bad, the brutal inside real deals. We go deep, not just on how a deal works, but how people feel their way through them. What they missed, what they wish they knew and what made all the difference. So if you want to stay sharp make sure you subscribe wherever you listen. It's on Spotify, Apple podcasts.
It's all there. There's a great library of information waiting for you to listen to. Now, if you've got a deal on the table right now, or you're getting close to one, don't guess your way through it. You can also book a strategy call with me. Just head to sampenny.com/chat. We'll walk through the deal together. I'll help you read between the lines, spot any blind spots, make sure you're making decisions based on insight, not on emotion. This is what I do.
That's what I love to do to help. Now, let's take a look at what we're going to dive into today in this session. So today's topic, it's deceptively simple, what the seller's exit plan reveals. But underneath that, this is about reading between the lines. It's about learning how to decode what the seller says and what they don't say. You can protect your investment before the contract is even signed.
We're going to cover five things today. First up, why the seller's story often hides the real exit drivers. So they may say that they're selling for lifestyle reasons, but we'll talk about how to spot deeper motivations and what they might mean for you. Second is how to identify the red flags in their transition plan from vague timelines to emotional hesitation. I'll show you what matters and why. Third,
What a well-prepared exit plan says about the culture and the systems behind the scene, because how they prepare to leave tells you a lot about how they've been running the business. Fourth is how to tell if the seller is actually ready to let go, both emotionally and operationally. And finally, how to ask the right questions without spooking the deal, because you see confidence comes from clarity, not confrontation.
This isn't about becoming a skeptic. It's about becoming a sharper buyer. So when you walk in eyes wide open, you walk away with a business that actually works. So let's get into it. Now here's the thing that most business buyers don't realize. The seller's exit plan tells you almost everything you need to know about the business without them even saying it directly. When you look closely,
You're not just evaluating the business, you're evaluating how the seller is preparing to leave it. And that gives you insight across four key areas. So the first one is the motivation. Are they running to something new, maybe a new opportunity, a planned retirement, or are they running from something like burnout, stagnation, maybe even some internal drama? The difference is massive. One comes with clarity.
The other comes with hidden mess. Now, the second thing that the exit plan tells you is confidence. A seller with a clean, well-structured transition plan, it signals confidence in their business, their team, but also you. A seller who's winging it, that right there is a red flag. Now, the third part is trust. You see, consistency matters here. If what they say on the phone,
doesn't match what they wrote in the IM. If the answers change maybe mid negotiation, you're not just seeing disorganization, you're seeing how much you can trust what you're being told. Now the fourth part of what the exit plan tells you is risk. So ask yourself this, who actually holds the relationship, the operational knowledge, the IP, if it's all in the seller's head and there's no systems, there's no documentation, there's no team accountability,
You buying the business and the brain and that brain is about to walk out the door. So you need to start listening to the exit plan like it's a story because the way they leave is a reflection of how they lead. Now let's look at some of the most common things sellers say. And more importantly, what might actually be going on underneath? Because you see, you have to remember that all sellers are human.
They want to put the best spin on their exit, but sometimes those polished lines are covering real issues, the kind that become the problem after the deal. So let's break a few down. Firstly, they might say, I just want to retire. It sounds clean, but you need to ask yourself, is this really about lifestyle or is there burnout? Is there declining energy or maybe pressure from family or partners that's really forcing their hand?
The second question that I quite often hear is it's time for a new change. That might be true, but often it also means that they've hit a growth ceiling. They can't see the next stage and they don't have the drive or the team to get there. The third question is I want to travel more. Sure. But yeah, this could be code for I'm exhausted. been wearing too many hats. This business is still too dependent on me.
And the last question that I often hear from buyers is I've done my time. And this one's honest, but it often reveals emotional fatigue. It reveals a lack of succession planning and also a leadership void that hasn't been addressed. Now, none of these deal breakers on their own, but they're invitations to dig deeper. So don't just take the first explanation at face value.
You need to ask yourself, what's the story behind the story? Because as the buyer, you're not just buying the numbers, you're stepping into the reality that caused them to walk away. And if you don't read that right, you'll inherit more than you bargained for.
All right. Here's a simple, but I reckon a really powerful truth. The seller's exit plan is a mirror of how the business has been run. If the exit is vague, if it's reactive and unstructured, chances are the business has been the same. On the other hand, if the seller is clear on the timelines and if they've mapped out that transition plan and they know who's doing what post-sale and also their documentation is
buttoned up. That usually means that you're stepping into something stable. So let's break it down. Firstly, is there a handover timeline? Not just a, we're going to work something out, but a step-by-step sequence that has dates, roles, and deliverables. Because this shows whether they've actually thought about how you succeed after they leave. And second, are the roles and responsibilities mapped out post-sale? So
Who's taking over what, what decisions will need to be made in your first 30 to 90 days. And if this is unclear, you're walking into fog. Third, is there clear documentation of processes and also the IP? And this one right here is a huge one. If everything is still in the founder's head, things like client relationships, workflows, pricing models, systems,
You're not buying a business, you're buying a person and guess what? That person is about to disappear. The exit plan isn't just about the seller's story. It's a stress test for the business itself. And it tells you before the money changes hand, whether this thing runs on systems or if it's on personality. Okay, so how do you get behind the polished pitch and really to see what's going on?
You need to ask questions. It's not about interrogation. You're not trying to interrogate, but you need to observe because in these moments, it's not just the answers that matter. It's the tone, the certainty, the body language, the reaction time. Here are four powerful questions to ask and also why they work. So the first question that I always love to ask a seller is what's your ideal exit time and what would you need to feel complete?
This really gives you an insight into whether they've thought this process through or if they're just trying to get out. A vague answer equals a vague handover. Now the second question, what are you most worried about in the handover? This one here really opens up the emotional and the operational weak points. It reveals whether they trust the team, the systems or you. And the third, who on your team
Do you think will be the key to future success? Now, this is a test. If they hesitate or if they name no one, this business might be a solo act. That right there is a red flag. Now, the fourth question that I love to ask a seller is, what would make you walk away from this deal? And you see, this question really surfaces their boundaries. It helps you understand what matters to them.
but also what might blindside you during negotiation. Now these questions do two things. Firstly, they show you how much the seller has really thought about the next chapter. And secondly, they help you gauge emotional readiness, not just the emotional readiness, because you see a seller who hasn't processed the exit won't hand over cleanly. And a buyer who misses that inherits more than they really planned for.
So let's talk about the seller behavior and also the subtle signs that something's off because sometimes it's not what's in the deal. It's how the seller shows up during the deal that tells you what you're really buying. So here are some red flags to look for. Firstly, dodgy or a vague transition plan. If their exit timeline keeps changing, if they say, we'll figure it out later,
And that becomes their default. That's not flexibility. That's a real warning sign. It means they haven't done the work. The second red flag is they avoid talking about their key staff. So when a seller dodges questions about who's staying or what the team dynamic is, it often means that there's uncertainty or even dysfunction that they really don't want you to see. The third red flag is over promises.
They over promise involvement, but they avoid structure. They say things like, don't worry. I'll stay as long as you need me, but there's no schedule. There's no deliverables. There's no terms. That's not reassurance. It's a smoke screen. You need commitment, not just vibes from the seller. And the fourth red flag is defensiveness when they're questioned.
You see a seller who gets cagey or annoyed when you ask detailed questions is often hiding weaknesses or they're struggling to let go emotionally. And the last red flag that I often see in seller behavior is that they talk emotionally, not strategically. So if the conversation keeps circling back to legacy, to identity or guilt, that's a seller who might say they're ready, but they won't actually be able to let go.
individually, these behaviors, they might seem small, but together, there's they signal a seller, and also the business that could collapse under the transition. So what you need to do is spot the size now, or else you're to pay for them later. Now, let's flip the script. Let's talk about what good looks like. Because when a seller is truly ready, they're emotionally ready, operationally ready, I'll tell you what it shows and a great exit plan.
It's calm, it's confident, and it's clear. There's no scrambling. There's no vague handoffs. There's no last minute surprises. So here's what to look for. Firstly, is a clear timeline with milestones, not just, I'm out in three months, but have it mapped out, have a mapped out sequence when access will be granted, when training will happen, when decisions transfer, it's structured, not wishful thinking. The second is role clarity post-sale.
You know exactly what they'll do and also what they won't. Whether it's a 30 day handover, a 90 day shadowing, or even advisory for six months, it's defined, it's documented, and it's agreed upon. The third point is team onboarding support. They've briefed the staff, they've planned the introductions, they're not just exiting the business, they're actively helping you to enter it.
The fourth point of what a great exit plan looks like is SOPs documentation and training material. You're not left piecing things together. Processes are documented, systems are explained, tools are handed over. There's a playbook, not just a Dropbox folder. And the last point is a seller who emotionally and operationally is ready to let go.
And this right here is the X factor. They're proud of what they've built, but they're not clinging to it. They're future focused. They want the deal to work for you. And when you see all of this, that's not just a good plan. That's a transferable business.
All right, let me walk you through a real example of what happens you ignore the signs. So this was a deal that I observed up close. It was a solid business on paper, had a decent valuation and a real promising upside. The buyer was sharp, the financials were strong. It was attracting a 3.5 time multiple. And there was cash flowing from day one, but here's what happened. The seller
had no exit plan. There was no timeline. There's no training materials, no transition schedule. And they said all the right things. I'll stay on as long as you need me. We'll work it out as we go. But when the deal closed, they were gone within two weeks. There was no documentation. There was no team briefings. There were no introductions to clients or key suppliers. The buyer then had to spend the next six months in triage mode.
And what also happened was that key staff left, the revenue started to dip and really customers were confused. But also the processes had to be built from scratch. And here's the kicker. This wasn't a bad business. It was a bad exit. And what looked like a smooth handover on the surface became five times the work and nearly cost the buyer everything. The deal didn't just burn money. It burned time, energy,
and momentum. So here's the takeaway. The exit plan, it's part of the deal. It's not an afterthought. You don't just buy a business, you buy the first 90 days after the handover. And if you're not crystal clear on what on what that looks like, you're gambling, you're not investing. Now, let's make this really actionable.
Everything we've talked about today, it's important, but only if you apply it. So I've built a toolkit to help you take this from theory to strategy and from strategy to better deal. So first up is the exit readiness scorecard. So this lets you assess quickly and clearly how prepared the seller really is. Are they structured? Are they reactive? Are they transparent or evasive? This tool helps you
quantify what you've been sensing and you can get that straight off my website. Just head to sampenny.com/readiness. and you can assess that company right there and then, and get a great sense of how ready they actually are to sell. The second, key transition questions guide. So you should use this before or during a negotiation.
to really uncover the hidden risks. It's going to help you ask the right questions, the kind that reveal more in how they've answered what they've said. And the third is the deal debrief template. So after every buyer-seller conversation, use this template to reflect what felt solid, what felt shaky, where's the gap between what they're saying and what you're seeing.
And then finally, in the toolkit, just have a one-on-one session with me, a strategy session. If you've got a deal on the table or even just a seller conversation coming up, just simply book a session with me and we'll go through it together. It's easy to do. Just head to sampenny.com/chat, and we can book something in. free. Use me. I'll help you read.
between the lines, I'll help you assess the risk, but also sharpen your questions because you see confidence isn't just about courage, it's about clarity. And this toolkit is designed to give you exactly that. So you'll find the links in the follow up show notes. ⁓ And remember, don't forget to head to sampenny.com/chat to book in a one on one with me. All right. Now, let's zoom out.
Let's recap on why all of this matters because when you're buying a business, it's easy to get caught up in the financials, in the deal structure, in the price. But the exit plan is where the real risk and the opportunities live. Because the way the seller exits tells you five powerful things. Firstly, it reveals motivation. Are they selling from strength or weakness? Are they running towards
the future or away from something they can't fix. Number two, it predicts handover success. So is there a roadmap or is it chaos wrapped in charm? If there's no structure, you're not stepping into a business. You're stepping into a cleanup job. Now, number three, it exposes reliance on the owner. So who actually holds the keys, the systems, the relationships, the operational know-how?
If it's all in their head and their head is leaving that right there is a ticking time bomb. Number four, it shows emotional readiness. You see, you can't force a clean exit from someone who hasn't let go. You'll feel it in their tone, their defensiveness, their hesitation. Number five, and the last reason why all of this matters is it protects
your investment before you commit. This is about prevention because once the deal is signed, the problems are yours. So you need to take this seriously. Read the plan, read the person and make decisions based on evidence, not just assumptions. Because smart buyers don't just spot the upside. They know how to measure the risk that comes with it.
Now, if you've got a deal on the table, or if you're in conversations with a seller, this is where things get real. Because no matter how experienced you are, the closer you get to the deal, the harder it is to stay objective.
You need to start filling in the gaps. If you start overlooking red flags, you want it to work and that makes it easy to miss what's not being said. That's where I can help. If you want someone to pressure test the deal with you to look at the seller's plan, their behavior, their numbers, their tone. I offer a private one-on-one strategy session. This is where we go through it together. You bring the deal. I'll bring the lens and we'll walk through the seller's transition plan, the team set up.
the risks you might not be seeing and the questions you still need to ask. And at the end of 30 minutes, you're to leave with clarity, not just gut feel, but a real understanding of what you're stepping into. And if the deal's strong, I'll tell you, if it's shaky, I'll show you where because there's a difference between confidence and recklessness. And the line is in preparation.
And don't forget, you can book a session at sampenny.com/chat. This isn't about second guessing yourself. It's about giving yourself an advantage. And that advantage could be the reason you thrive instead of just survive. All right, let's close with this. The seller's exit plan. it's not just a courtesy. It's a real lens. gives you insight into how the business operates.
So gives you insight into how the business operates, how prepared the team is, how much trust can you place in what's being built and how much will fall on you after day one, the day you take over. You're not just buying a profit stream. You have to remember profits all in the past, you'll buy in the future. You're buying a business in transition and how the seller handles that transition. It tells you everything about
what's waiting on the other side of the deal. And the best buyers don't just chase numbers. They know how to read the room. They sense when a seller isn't ready. They spot what's missing. They protect their time, their energy and their capital by walking in with their eyes wide open. So look, if this gave you some insight from this session, please make sure you act on it. Use the tools, ask the questions.
Get a second set of eyes if you need to and back yourself with clarity and not hope. Now, in our next session, we're diving into something just as powerful. How to value and leverage intangible assets as a buyer. I'm going to unpack how to identify, how to price and negotiate for value drivers.
that don't show up on the balance sheet. Things like brand, culture, IP, the systems. Now, I'll see you there. In the meantime, be sharp, be clear, and always buy with intent.
