The Salmon Index™ · Exit Cycle Protocol™
The Salmon Index™
Exit Cycle Protocol™ — ECP Instrument Suite · Engineering your hold period. Maximizing your exit.
ECP · Professional Edition · v1.0
ECP · 01 — Business Diagnostics
DIAGNOSE
Enter your business fundamentals as they stand today. These inputs anchor every projection, multiple expansion calculation, and verdict across the instrument. Update them at each hold period review — quarterly at minimum.
Business Profile
EBITDA — Entry vs Today
Revenue Quality
Hold Period Parameters
Your engineered EBITDA target at the time of exit process launch
Current State Dashboard
EBITDA Growth
—
since entry
Recurring Rev Delta
—
points gained
Gross Margin Delta
—
points gained
Hold Progress
—
of target period
ECP · 02 — Hold Period Engineering
WORKSTREAMS
Five workstreams define your entire hold period engineering program. Status drives the exit readiness score. Update each layer as you complete it. The scoring weights reflect real-world multiple expansion contribution — Workstreams 1 and 2 carry the most weight because they produce the largest measurable impact on exit multiple.
Workstream Completion — 0 / 100 Points
WS1 Owner Dependence Elimination
0 / 25 pts
Layer 1 — Prior Owner Transition. Has the selling owner fully exited all client, operational, and revenue relationships?
6 pts
Layer 2 — Key Employee Single Points of Failure. Are all critical employee dependencies identified and mitigated with cross-training or redundancy?
6 pts
Layer 3 — Revenue Generation Dependency (Rainmaker Problem). Has the primary revenue generation function been transferred from a single individual to an institutional, documented channel?
9 pts
Layer 4 — Structural and Credentialed Dependency. Are all licenses, registrations, certifications, and regulatory standing independent of any single person?
4 pts
WS2 Recurring Revenue Conversion
0 / 25 pts
Retainer and Contract Structures. What proportion of current revenue is under formal retainer, subscription, or multi-period contract agreements?
10 pts
Institutional Revenue Channels. Have new institutional referral or distribution channels been built that generate revenue independent of prior owner relationships?
8 pts
Revenue Retention Documentation. Is the recurring revenue base documented with contract terms, renewal schedules, and client contact records that will survive due diligence?
7 pts
WS3 EBITDA Normalization and Add-Back Documentation
0 / 15 pts
Add-Back Identification. Have all legitimate add-backs been identified — owner's excess compensation, personal expenses, one-time items, and non-recurring adjustments?
5 pts
Add-Back Documentation Quality. Are add-backs supported by source documents and formatted into a buyer-ready normalized EBITDA schedule?
5 pts
Gross Margin Improvement Initiatives. Have active initiatives been executed to expand gross margin above the entry baseline?
5 pts
WS4 Operational Systems and Process Documentation
0 / 15 pts
Standard Operating Procedures. Have SOPs been written for all critical operational functions — service delivery, onboarding, billing, HR, and client management?
6 pts
KPI and Reporting Infrastructure. Is a real-time or near-real-time reporting dashboard in place showing revenue, margin, capacity utilization, and client retention metrics?
5 pts
Process Architecture Documentation. Is there a documented organizational chart, decision authority matrix, and process flow map that shows how the business functions without owner involvement?
4 pts
WS5 Exit Engineering
0 / 20 pts
Buyer Universe Built. Have you identified a minimum of five qualified buyers including at least two Tier 1 buyers (strategic or PE platform) who are actively acquiring in your sector and geography?
5 pts
Exit Narrative Developed. Has a written acquisition narrative been developed articulating your platform thesis, EBITDA trajectory, recurring revenue story, and strategic rationale for each buyer type?
5 pts
Financial Package Prepared. Has the full financial diligence package been assembled — normalized EBITDA schedule, revenue detail by client, customer tenure analysis, and management presentation?
5 pts
Competitive Tension Engineered. Have two or more buyers been brought into active parallel conversations in a way that creates timing pressure and pricing competition?
5 pts
ECP · 03 — EBITDA Engineering
EBITDA
Reported financials understate the true earnings power of an owner-operated business. Document every legitimate add-back here. The adjusted EBITDA this tab produces is the number a sophisticated buyer and their lender will underwrite. Build this schedule early and update it every quarter.
EBITDA Normalization Schedule
Reported vs Adjusted EBITDA
Enter add-back descriptions and amounts. All fields are editable.
Reported EBITDA
$—
from Diagnose tab
Total Add-Backs
$—
sum of items below
Adjusted EBITDA
$—
normalized for exit
Add-Back Item Description Annual Amount Type
Gross Margin Analysis
Entry gross margin: —  |  Current gross margin: —  |  Delta: —
Enter margin data in the Diagnose tab to generate margin assessment.
EBITDA Engineering Summary
Entry EBITDA
$—
Current Adjusted EBITDA
$—
Target Exit EBITDA
$—
from Diagnose tab
Hold Period Cash Flow Extraction
Value Extraction Engine
Track all value extracted from the business during the hold period. Total wealth creation = cash extracted during hold plus net equity at exit.
W-2 salary or guaranteed payment drawn from the business annually
Total annual P&I payments on acquisition debt (SBA plus seller note)
DSCR
—
minimum 1.25x healthy
Net Distributable CF
—
annually after debt service
Compensation to Date
—
based on months held
Total Extracted to Date
—
comp plus surplus distributions
Five Wealth Extraction Layers
ECP · 04 — Multiple Expansion
MULTIPLE
Every workstream you complete adds measurable multiple expansion at exit. This tab shows your entry multiple, the projected contribution from each workstream, and your target exit multiple range. The difference between your entry multiple and your exit multiple is the financial engineering your hold period produced.
Multiple Expansion Tracker
1x2x3x4x5x6x7x
Entry Multiple
—
Projected Exit Multiple
—
—
Total Expansion
—
from workstreams
Expansion Contribution by Workstream
WS1 — Owner Dependence Elimination —
WS2 — Recurring Revenue Conversion —
WS3 — EBITDA Normalization —
WS4 — Systems Documentation —
WS5 — Exit Engineering —
Total Projected Multiple Expansion —
Sector Multiple Ceiling
Select your sector in the Diagnose tab to see sector-specific exit multiple ranges and buyer universe context.
ECP · 05 — Exit Buyer Preparation
BUYER
Competitive tension at exit is engineered, not accidental. Build your buyer list at least 18 months before your target exit date. Tier 1 buyers — strategic acquirers and PE platforms — must be in active relationship before your process launches. The minimum for a competitive exit process is two Tier 1 buyers and five total qualified buyers.
Buyer Universe — 0 Identified  |  0 Tier 1
Buyer Name Buyer Type Tier Relationship Status
Total Buyers
0
5 minimum recommended
Tier 1 Buyers
0
2 minimum required
Active Relationships
0
in active contact
Add buyers above to generate buyer universe assessment.
ECP · 06 — Exit Timing Protocol
TIMING
The exit window is not determined by when you are ready — it is determined by when the market is ready and when your engineering is complete. This tab tracks both. The AIM Threshold is the minimum exit readiness score required before launching a formal sale process. Below that threshold, additional hold period engineering will produce better outcomes than a premature exit.
Hold Period Status
Months Held
—
Target Hold Duration
—
Months Remaining
—
Market Conditions Assessment
Pre-Exit Readiness Checklist
○ EBITDA normalized and add-back schedule buyer-ready (WS3 complete) Pending
○ Owner dependence eliminated across all applicable layers (WS1 complete) Pending
○ Recurring revenue at or above 30 percent of total revenue Pending
○ Customer concentration below 30 percent for largest single client Pending
○ Gross margin at or above entry baseline Pending
○ Operational systems documented and SOP library complete (WS4 complete) Pending
○ Buyer universe built with minimum two Tier 1 buyers (WS5 buyers complete) Pending
○ Exit narrative and financial package buyer-ready (WS5 complete) Pending
Exit Timing Recommendation
Complete the Diagnose tab and Workstreams to generate a timing recommendation.
ECP · 07 — Exit Readiness Verdict
VERDICT
The exit readiness verdict consolidates every workstream, diagnostic input, and financial projection into a single operational assessment. A score of 80 or above across all five workstreams is the AIM threshold for launching a formal sale process. Below that threshold, additional hold period engineering will materially improve your exit outcome.
0
Exit Readiness Score
Exit Financial Projection
Projected Exit EBITDA
—
adjusted for exit
Projected Exit Multiple
—
Projected Enterprise Value
—
Projected Net Equity
—
after debt payoff
Cash Extracted During Hold
—
comp plus distributions
Add-Back Exit Value
—
add-backs × exit multiple
Total Wealth Creation
—
all five layers combined
Workstream Status Summary
Priority Action Stack
SVE Handoff — The Salmon Index™ Valuation Engine
When your exit readiness score reaches 80 or above, transfer your adjusted EBITDA, projected exit multiple, and sector data into the SVE Instrument Suite. The SVE will compute a precise acquisition valuation range, timing gate, and LOI framework calibrated to your exit-ready business. The ECP engineers the asset. The SVE prices it.
The ECP is an analytical framework and does not constitute investment or financial advice.  Terms of Service  ·  Privacy Policy  ·  support@thesalmonindex.com
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