Preparation
Preparing the business before it goes to market
An owner who has run a company for twenty years usually knows every operational detail of it and very little about what a buyer or a lender will want to see. That gap is normal, and it is closeable, but it takes time. The businesses that sell for a good price on a reasonable timeline are almost always the ones where the owner started preparing well before the listing went out.
This page walks through what that preparation actually involves, roughly in the order it pays to do it.
Start with the books
Financial records are the first thing a serious buyer and every lender will examine, and they are usually the slowest thing to fix. If your bookkeeping runs behind, if personal and business expenses mix in the same accounts, or if you have been minimizing taxable income for years, none of that can be untangled in a weekend. Give it a year or two of clean, consistent statements before you go to market, reconciled monthly, matching your tax returns.
This single step affects value more than almost anything else on this list, because it determines how much of your real earnings a lender will actually finance. See how buyers read a P&L for exactly what they are looking for line by line.
Put the informal arrangements in writing
Verbal agreements with a key customer, a handshake understanding with a supplier, an employment relationship with a relative that was never formalized — these all look different to an outsider than they do to you. A buyer cannot underwrite a relationship they cannot see in writing, and a lender certainly cannot. Where you can, get customer and vendor relationships onto current, assignable contracts before you list.
The lease and the physical assets
If you lease your location, check the remaining term and whether it can be assigned to a buyer. A lease with two years left and no renewal option is a real problem for a buyer who needs financing over ten years, and it is far easier to address with your landlord now than to discover it during due diligence. Walk your equipment and facilities with the same eye a buyer will use: what needs maintenance, what needs replacing, and what would raise an obvious question during a site visit.
Working capital and the numbers underneath the numbers
Buyers and lenders will also look at how much working capital the business actually needs to operate normally — inventory levels, receivables, payables timing. Businesses that run lean on working capital because the owner has been personally covering gaps can look worse on paper than they really are. Get a clear, honest picture of this with your CPA before a buyer asks; it is not something we can advise on directly, but it is something every buyer will ask about.
What is your business worth?
Find out with a Broker Opinion of Value — no fee, no obligation to list, no engagement letter. We ask for a short intake first so the number is worth having. Businesses under $100,000 in Seller's Discretionary Earnings, and businesses with less than five years of documented history, are more difficult to sell and to finance, and we will tell you that early rather than late.
Documenting how the business actually runs
Write down the processes that currently live in your head or in the heads of a few long-time employees: how jobs get priced, how a customer complaint gets handled, how equipment gets serviced, who calls which supplier when something runs short. This work is tedious and rarely gets done unless someone commits to a schedule for it. It matters because it is what makes the business transferable rather than personal, which is the single biggest driver of what actually raises the price a buyer will pay.
Alongside that, look honestly at retention of your key employees. A buyer will want confidence that the people who actually keep the business running day to day are not planning to leave the moment the sale closes. If you have a manager or a lead technician the business depends on, think now about what would keep that person through a transition.
Preparation does not make a business into something it is not. It removes the friction that keeps a buyer from seeing what it already is.
Reducing how much the business depends on you
Everything above serves one larger goal: making the business run without requiring you specifically. That is slow, uncomfortable work for an owner who has been the center of every decision for years, and it is also the work that most reliably increases both the price and the number of buyers who can qualify to buy it. If you are weighing when to start this work against when you actually want to be done, our page on exit planning lays out how the timeline usually works, start to finish.
Common questions
Questions owners ask us
- How far ahead should I start preparing?
- Twelve to twenty-four months gives you room to fix the things that take time — cleaning up books, getting contracts in writing, reducing your own role. If you are closer to wanting out than that, we can still help, but some of these steps will have to happen after a buyer is already at the table.
- Is it worth doing this work if I am not sure I want to sell yet?
- Usually, yes. Most of what makes a business easier to sell also makes it easier to run — clearer records, less owner dependence, employees who can act without you. If you decide not to sell, none of it is wasted.
- Do I need to tell my employees I am preparing to sell?
- Not at this stage, and often not until much later in the process. Preparation work like documenting processes or reviewing contracts can be done quietly. We talk through what to disclose and when on our confidentiality page.
- Can you help me figure out what to fix first?
- That is a large part of what a Broker Opinion of Value is for. We look at your actual financials and operations and tell you, specifically, what is holding the number down and what would move it.