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At NAVIX, we know that most business owners’ top goal at exit is to reach financial freedom, which means having enough money so that work is a choice and not an economic necessity. If reaching financial freedom is the number one goal at exit, then your Exit Magic Number™ – the net amount needed to get there – is the most important number to know. So, what’s the second most important number to help you prepare for exit? Your company’s adjusted EBITDA. Unfortunately, many owners either do not know this number or calculate it incorrectly. Here’s why.

Many business owners consider at some point sharing ownership of their business with one or more key employees. Sharing ownership can create powerful advantages—retaining employees for the long-term is usually a top motive. Sharing ownership appears to elevate top employees into a true partnership with you in the ongoing effort to grow the business.

Legacy. This single word causes business owners more emotion when they are preparing for exit than any other single word. Few owners would define an exit as being “successful” if somehow their exit failed to uphold strongly-held values and beliefs. Legacy is hard to define. It means different things to different people. Yet it is immensely powerful. Many owners surprise themselves by how important legacy becomes a vital motive once they get close to exit. Legacy is so powerful that it can veto price. For example, many owners are willing to accept a lower purchase price for their company if it means making sure their employees, customers, and brand are treated better by that particular buyer.

Five conversations can put you on the path to a happy and successful exit. These conversations need to be open and honest, revealing your desire to exit the business eventually. They need to be handled intentionally and carefully, with preparation and practice, because there is a real danger you may do more harm than good. Ideally, the conversations need to happen well before you exit (we suggest about five years,) when you still have time to take the right advice coming out of these conversations and put it to use. Waiting until just before you exit to have these conversations negates the opportunity for positive action arising out of them, and risks alienating people who care about you and the business, and feel disrespected for not being included much earlier.

One of the most common mistakes owners make in their exit planning is negotiating with only one potential buyer for their business. Rarely, this works out fine, and the business sells for the desired price. However, more often than not, negotiating with only one potential buyer at a time undermines your exit success—sometimes without even knowing that you lost something.