What Should You Do 3 Years Before Selling Your Business?

By Tony Capeloto · July 2026

If you plan to sell your business within five years, the three years before the sale determine most of what you keep after it. The short answer: know your after-tax number, clean up owner-dependent earnings, confirm your entity and QSBS position, and make the estate moves that are only possible while your valuation is still low. Here's the sequence we walk Seattle business owners through.

Year 3: Know your number and fix the structure

Start with the number that actually matters — not what the business might sell for, but what you need to keep, after tax, to fund the life you want next. Work backward from annual spending, subtract other income sources, and capitalize the rest at a sustainable withdrawal rate. Owners who know their "enough" negotiate differently, and better.

Then look at structure. Whether you hold C-corp stock eligible for the Qualified Small Business Stock (QSBS) exclusion can change your federal tax bill by millions — but the holding-period clock needs years to run, which is exactly why this is a year-3 task, not a year-of-sale task. The same is true of entity cleanups, related-party leases, and untangling personal assets from the company's books.

Year 2: Make the business sellable without you

Buyers pay for earnings that survive the founder's exit. Year two is when you reduce owner dependence: document processes, deepen the second layer of management, diversify customer concentration, and normalize your own compensation so the financials show what the business earns rather than how you've chosen to pay yourself. Every dollar of earnings a buyer believes will persist without you is a dollar that gets multiplied in the price.

This is also the window for estate planning. Gifting or trust strategies executed before a sale — while the valuation is still private-company conservative — can move future appreciation out of your taxable estate. After a letter of intent exists, that door mostly closes.

Year 1: Assemble the team and model the deal

The year before a sale is about preparation, not panic. Assemble the team early: an M&A advisor or broker suited to your company's size, a transaction attorney, your CPA, and a financial planner modeling your side of the table. As offers arrive, the work shifts to comparing them on what you keep — asset versus stock sale treatment, earnout probability, rollover equity risk — rather than on the headline number. Two offers with the same price can differ by seven figures after tax and terms.

The question behind the questions

Most owners we work with aren't just selling a company; they're trading an identity and a paycheck for a portfolio and an open calendar. The financial plan has to answer the practical question — will the proceeds sustain us? — and leave room for the personal one: what now? Owners who've thought about both negotiate with a calm that buyers can feel.

If a sale is on your horizon — even a distant one — the planning clock has already started. We're happy to help you find your number, confidentially and without obligation.

Book a meeting — fee-only, fiduciary, Seattle.