Succession and exit for founder led lower-middle market companies

This page is for founder led lower-middle market companies with 5 to 50 million in annual revenue. The goal is to protect value, reduce risk, and give you clear choices on timing and structure.

Questions and short answers

How early should I plan succession for key roles

Start now. Map the top roles, the risks, and one ready now and one ready later option for each. Write a simple ninety day handover plan and a learning plan for successors. Review once a quarter and after any change in the business.
Plan succession for key roles

What options exist for a partial exit

Common paths include a minority equity sale, a majority recap with a private equity partner, a management buy out, or a sale of a division. Pick the option that fits your goals for cash, control, and future growth. Model tax, governance, and earn out terms before you choose.
Choose a partial exit path

How do I increase valuation in the 12 months before a sale

Focus on the drivers that buyers pay for. Grow gross margin and recurring or contracted revenue. Reduce customer concentration and clean up working capital. Close gaps in reporting, contracts, and IP. Document processes so the business runs without you.
Increase valuation before a sale

What should be in a management incentive plan tied to a transaction

Set clear value triggers such as enterprise value and cash collected. Define who is eligible and the vesting and payout rules. Tie awards to retention and to post close goals for the first year. Keep terms simple and share examples so managers understand how they win.
Design a transaction incentive plan

Related links

• /governance-and-boards

• /finance-and-profitability

• /m-and-a

Last updated: August 27, 2025

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