The problems that surface in diligence
An owner I know found out he had a concentration problem in front of a buyer’s diligence team. One customer was 40% of revenue. He knew the number. He’d just never said it out loud to someone deciding what his company was worth.
Another owner learned, three weeks before a signed LOI, that his financials hadn’t been reviewed in years. Not fraud. Not a mess. Just years of good bookkeeping that no outside party had ever put a stamp on.
Both problems were fixable. Neither should have been a surprise mid-deal.
When gaps like these surface during diligence instead of before it, the buyer gains the upper hand, the escrow gets bigger, and the check at closing gets smaller. None of that is about the quality of the business. It’s about timing, and about finding the problems on your terms instead of theirs.
We built a framework around three questions every owner should answer well before an LOI is signed or a banker is on the phone. Is the business ready. Is the market ready. Are you ready.
Is the business ready?
The balance sheet is the start of this question, not the end. Clean financials matter. So does customer concentration, management depth beyond the owner, and whether the business runs when you’re not in the room every day.
A buyer’s diligence team will find every one of these. The only question is whether you find them first.
Here’s what gets missed. When a sale is rushed, it’s the business’s story that gets undervalued. The financials are part of that story. They aren’t the whole of it.
There’s a timing trap inside this too. Value drivers like margin and working capital get judged on trailing performance. A buyer looks backward, not at your plans. So the work has to start well over a year out.
In my experience, 12 to 18 months usually isn’t enough. Pick your target close date and work backwards from it. If the number you want depends on two clean years of margin, count back two years and start there.
Is the market ready?
Timing isn’t just about the broader economy. It’s your industry, your growth trajectory, and whether this is a seller’s window or a buyer’s window in your specific space.
Those windows don’t open and close on the same schedule as the headlines. Two companies of the same size in different sectors can face completely different markets in the same quarter.
A great business sold at the wrong moment still gets a worse outcome than it should. You can do everything right inside the four walls and still leave money on the table because you went to market when buyers weren’t paying up.
Are you ready?
This is the dimension most exit planning skips entirely. The business gets valued, packaged, and sold. Then the owner gets a wire transfer and a Tuesday with nothing on the calendar.
I mean life after the sale. The transition out. Tax strategy. What you actually do with the proceeds once they land.
If you haven’t thought that through, the readiness of the business barely matters. I’ve watched owners chase every last dollar on price and then feel lost by the second month. The number was never the whole point.
Score all three before you go to market
The Everest Exit Readiness Check scores three things. Business Ready. Market Ready. Owner Ready. It tells you exactly what’s still open.
Think of it as a short self-check, not a project. It’s the cheapest insurance an owner can buy if a sale is anywhere in the next few years.
You can start with the Exit Readiness Check and read more about the full process at Prepare to Sell / Exit Readiness. Neither one commits you to selling. They just tell you where you stand.
Let’s talk
The best time to have this conversation is before an LOI is signed or a banker is on the phone. Once the deal is moving, your options narrow fast.
We’ve sat in your seat. Now we’re in your corner.
