Getting a business ready to sell makes it worth more and puts more of the price in the owner’s pocket. It also makes the business better to run in the meantime, which is why the right time to start is years before a sale.
A Business That’s Ready to Sell Is Better to Run
I talk about this with owners all the time, and the conversation usually starts in the wrong place. They think exit preparedness is something you do in the year before a sale, once you’ve decided to sell.
The work is the same whether you sell next year, in ten years, or never. A business with reliable numbers, a clean structure and a team that doesn’t need the owner for every decision is more fun to run. It gives you more time and more money to spend on the things you’d rather be doing than running the company day to day.
So the question isn’t whether you’re ready to sell. It’s why you’d keep running a business that struggles when you could be running a great one.
Two Things Decide What You Walk Away With
When a sale does come, two things decide what ends up in your pocket. Most owners only think about the first.
1. What the business is worth
Buyers pay a multiple of earnings, and the multiple moves with risk. Predictable revenue, healthy margins, customers spread across many accounts and a team that runs without you all push it up.
This is the part owners picture when they think about value. It’s real, and it’s where a lot of our work goes.
2. What comes out of the price before you see it
The headline number is not what you take home. Holdbacks, escrows, working capital adjustments, earnouts that never pay out and anything a buyer can’t get comfortable with all come out of it, and so does the tax bill if the structure is wrong.
Every uncertainty a buyer finds becomes a deduction, a delay or a lower offer. Owners who clear those uncertainties first keep more of what they were offered.
What We Find Most Often
Most of what lowers a price was already true long before the buyer showed up. These are the problems we see again and again.
No projections, or projections nobody trusts
Plenty of businesses don’t have a forecast at all. Others have one that’s never been checked against what actually happened. A buyer will build their own, and theirs won’t be generous. A forecast tied to real pipeline is one of the simplest ways to make revenue look as predictable as it is.
A corporate structure that’s a mess
Entities that were set up years ago for reasons nobody remembers, intercompany balances that don’t reconcile, ownership that isn’t documented cleanly. Each one is a question a buyer has to get answered before closing.
Real estate in the wrong entity
When the building sits in the operating company, or in the wrong type of entity, it can put an unnecessary tax burden on the owner after the deal. This is usually fixable, but only with time and planning.
Unfiled tax returns
Missing or late filings stop diligence cold. They’re also the kind of problem that takes months to fix, which is time you won’t have once a buyer is waiting.
Earnings that won’t survive a quality of earnings review
A buyer will commission a quality of earnings report to test whether your earnings are what you say they are. If they find add-backs that don’t hold up or revenue that isn’t recurring, the price drops with them. Running that review on your own numbers first means you find the problems while you can still fix them.
An owner the business can’t run without
If the key relationships and decisions all run through you, a buyer is paying for a business that walks out the door at closing. The same is true if you’re planning to retire and hand the business to family or a management team. Succession only works when the business can run without you.
How We Assess Where You Stand
We start by measuring before we fix anything. There are three ways in, depending on where you are.
The Exit Readiness Check is free and takes about two minutes online. Ten questions score three things: Business Ready, Market Ready and Owner Ready. It gives you a rough read on where you stand.
The Exit Readiness Assessment is paid and led by one of our Managing Directors. It scores every dimension in detail and names what has to be fixed before a buyer finds it.
For owners who aren’t selling yet and want the value built first, the Enterprise Value Diagnostic looks at what’s holding value back: revenue quality, margin, scalability, cash conversion, competitive position and the team.
What Happens After the Assessment
A score on its own doesn’t change anything. What matters is what you do with it.
We tie every gap to what it’s costing you in value or in deductions, so the work gets done in the order that matters most. Then we do the work. That’s Value Creation, our flagship engagement: building the forecast, cleaning up the reporting, fixing working capital and cost structure, getting your earnings ready for a quality of earnings review, and reducing how much the business depends on you. Where the fix sits with your tax or legal advisors, like entity structure or real estate, we work alongside them.
Our operators have run finance and operations inside businesses like yours, and we’ve been in the room when buyers ask the hard questions.
When to Start
In our experience, the owners who get the best outcomes start fixing gaps years before a sale, not months before. A year ahead is the minimum, and longer is better. Some of these problems take a few weeks to fix. Others, like the tax and structure work, take a year or more.
Starting early also means you’re never forced to sell on someone else’s timeline. If an offer comes in unexpectedly, you’re ready for it.
The Bottom Line
Exit preparedness raises what your business is worth and protects what you take home from a sale. It also gives you a better business to run until that day comes.
If a sale is anywhere on your horizon, even a distant one, the time to start is now. We’ve sat in your seat. Now we’re in your corner.
If a buyer called tomorrow, what’s the first thing their team would find?
Frequently Asked Questions
What is exit preparedness?
Exit preparedness is the work of getting a business ready to sell before a sale is on the table: reliable numbers, a clean structure, earnings that hold up under review and a team that doesn’t depend on the owner. It raises what the business is worth and reduces what comes out of the price at closing.
How early should I start preparing my business for a sale?
At least a year before you expect to sell, and longer is better. Some fixes take weeks, but tax, entity structure and owner dependence can take a year or more, and they’re much harder to fix once a buyer is in diligence.
Do I need a quality of earnings report before I sell?
You don’t need one to sell, but a buyer will almost always commission one, so it helps to know what it will find. Reviewing your own earnings first lets you fix add-backs or revenue issues while you still have time, instead of seeing them come back as a lower offer. A sell side quality of earnings review does that work for you.
What reduces the amount a seller actually takes home?
Holdbacks, escrows, working capital adjustments, earnouts that never pay out and taxes. Anything a buyer can’t get comfortable with tends to show up as one of these. Clearing those uncertainties before a sale keeps more of the price with the owner.
Does exit preparedness matter if I plan to retire and pass the business on?
Yes. Whether the business goes to family, a management team or an outside buyer, it has to run without you. The same work that prepares a business for a sale prepares it for succession.
What’s the difference between the Exit Readiness Check and the Exit Readiness Assessment?
The Check is free, takes about two minutes online and gives you a rough read on where you stand. The Assessment is paid, led by one of our Managing Directors and names in detail what has to be fixed before a buyer finds it.
