How to Prepare Your GovCon Business for a High-Value Exit

For many government contracting (GovCon) business owners, selling their company is the most important financial decision they’ll ever make. But too often, owners wait too long to start preparing, leaving value on the table, or worse, failing to exit at all.

A successful exit isn’t something you can rush. It’s a long game, and like any worthwhile strategy, it starts with clarity, discipline, and alignment. Whether your goal is to sell next year, in three years, or five, preparing your company for sale requires more than strong revenue or contracts—it requires making your business attractive to a buyer on the buyer’s terms.

Here’s how to approach the process of preparing for an exit thoughtfully, deliberately, and in a way that positions you for the outcome you want.

Start with a Target—and Build Toward It

One of the most common mistakes I see GovCon business owners make is waiting until they’re ready to sell to figure out what the business is worth. Instead, reverse the logic: Set a target valuation based on your retirement goals, legacy goals, or desired exit timeline—and build the business to support that number.

Let’s say you want to exit in five years with $10M after taxes. Depending on the type of buyer (strategic, financial, PE), the size of your company, and the deal structure, your company may need to be worth $12M–$15M to net that outcome. That means building to a multiple-worthy business, and that takes time.

By having a target in mind, you can work backward:

·      What revenue and EBITDA levels will support your goal?

·      What contracts or capabilities will justify a strong multiple?

·      What structure or team will make the business transferable?

When you exit by design, not default, you control your outcome.

Give Yourself Enough Runway

If you’re asking, “How soon should I start preparing to sell?” the answer is almost always: sooner than you think.

Three to five years is the sweet spot for most small and mid-sized GovCon companies. Why so long? Because that gives you time to:

·      Fix structural weaknesses (e.g., key-person dependency, contract concentration).

·      Secure critical recompetes and demonstrate revenue stability.

·      Clean up your financials and optimize margins.

·      Position your company in the language buyers use to assess risk and value.

It also gives you time to test new leadership roles, improve operations, and gradually shift your personal involvement—so you’re not the business when you try to sell the business.

Understand What Buyers Actually Value

Buyers aren’t buying the past—they’re buying the future. Your historical revenue matters, but what they really want to know is: What happens after the deal closes?

That’s why a business that looks great on paper can fall apart during due diligence if the underlying value isn’t transferable or sustainable. To prepare for a premium exit, you need to optimize for the factors that drive value in the eyes of a buyer:

·      Contract Diversification: Revenue spread across multiple agencies and vehicles is more attractive than reliance on a single IDIQ or agency.

·      Past Performance: Strong, recent performance on prime contracts is gold—especially in competitive areas like cyber, intel, logistics, and IT services.

·      Margins: Buyers aren’t just buying revenue—they’re buying earnings. Improving your margins (and being able to explain them) is key.

·      Team Depth: Can the business run without you? The less you are needed post-close, the more valuable your company becomes.

A buyer wants to feel like they’re inheriting a machine that works, not a system that only runs when you’re behind the wheel.

Prepare Your Team—They’re Part of the Value

In a service business, your team is the product. That’s especially true in GovCon, where cleared personnel, subject matter experts, and program managers are often the main reasons contracts get awarded—and re-awarded.

Yet many business owners hesitate to involve their team in exit planning, worried about panic or turnover. The reality is, not preparing your team introduces far more risk than being transparent.

Preparing your team means:

·      Identifying key personnel you need to retain through and beyond the transition.

·      Putting incentives in place—bonuses, stay-pay, or earn-outs tied to deal success or post-close retention.

·      Preparing second-tier leadership to take on more responsibility, ensuring operational continuity.

The buyer isn’t just evaluating your P&L. They’re assessing whether your people will stay. Show that your team is stable, valued, and aligned, and your business becomes significantly more attractive.

Get Your Financial House in Order

Even successful GovCon businesses often have messy books. Maybe accounting is mixed with personal expenses. Maybe financial reporting is cash-based or overly aggressive. Maybe margins are thin and unexplained.

Buyers want clean, understandable, and verifiable financials—and that takes time to establish. Preparing your financials may involve:

·      Switching to accrual accounting, if you haven’t already.

·      Conducting a mock Quality of Earnings (QoE) review to identify red flags early.

·      Normalizing EBITDA to reflect true operating performance (e.g., removing owner perks, non-recurring expenses, or overcompensation).

·      Improving reporting systems so you can show performance by contract, client, or capability area.

The earlier you start this cleanup, the more time you’ll have to show strong, consistent performance to a buyer—and the more leverage you’ll have in valuation discussions.

Know Your Contracts—and Be Ready to Defend Them

In GovCon, your contracts are your asset. But not all contracts are equally valuable in the eyes of a buyer.

Buyers want contracts that are:

·      Transferrable—no surprises during novation.

·      Recompete-positioned—with a high likelihood of renewal.

·      Well-managed—no performance issues, scope creep, or invoice problems.

·      Compliant—clean CPARS, no audit liabilities, and documentation in order.

It’s worth doing a contract health audit 12–18 months before you plan to go to market. That gives you time to clean up any performance issues, resolve open items, or renew contracts to increase backlog value.

Tell the Right Story—In Buyer Language

Finally, the best exits happen when sellers can articulate their value clearly and in the buyer’s frame of reference. This is where many GovCon owners fall short. They describe their company in terms of culture, history, or their personal journey—which is meaningful, but not what a buyer is actually looking to hear.

Buyers want to hear:

·      Where growth is coming from—not just where it came from.

·      What makes your contracts defensible, and your pipeline credible.

·      Why your company is scalable without the founder involved in every decision.

·      How your team operates, wins, and executes—because that’s what they’re buying.

Craft a narrative that connects your performance to a future vision. Show how a buyer can take what you’ve built and scale it even further. Make your company make sense in their model—and they’ll pay you for the privilege of owning it.

Final Thoughts: Exit by Design, Not by Default

Selling your business is a major milestone, but it shouldn’t be a scramble. A well-prepared exit takes time, intention, and the right strategy. The best exits happen when business owners start early, build toward a target, and optimize every part of the business—from contracts to culture—for long-term value.

Whether you’re aiming to exit in three years or five, the process starts with clarity. What are you building toward? What will a buyer need to see to pay what you want? And what can you do—starting today—to make that vision a reality?

I help GovCon business owners grow with purpose and exit with confidence. If you want to talk through your long-term goals or how to prepare your company for a successful sale, let’s connect.

Let’s build toward the value you’ve earned.