Planning the exit around the life after it
Start from spending, not valuation
Most founders anchor on what the business might be worth. The better question is what the sale needs to fund. Once you know the annual spending you want, the rest is arithmetic: the portfolio that can support it, and the price that produces that portfolio after everyone else has been paid.
Tax and deal costs come off the top
A $20M headline price is not $20M in your account. Capital gains tax, advisory fees, legal costs and escrow holdbacks can take 20% to 35% before you see a dollar. Structure matters too: an earnout or rollover equity shifts part of the price into the future.
When the number does not work yet
If the required price is well above a realistic estimate from the SaaS valuation calculator (opens in a new tab), you have three levers: grow the business before selling, sell a majority stake and keep a second bite, or adjust the lifestyle target. Knowing which gap you are closing shapes the whole process.
Frequently asked questions
- How much do I need to sell my business for to retire?
- Divide the annual spending you want by a sustainable withdrawal rate, typically 3% to 4%, to get your portfolio target. Subtract assets you already hold, then gross the gap up for tax, deal costs and your ownership share. The result is the headline price you need.
- What withdrawal rate should a founder use after an exit?
- Use 3% to 3.5% if the money must last 40 years or more, and 4% for a traditional 30-year retirement. Founders who exit young should plan conservatively because the portfolio has to support a longer life.