Buyers pay for certainty. The more a buyer can verify quickly, the less they discount for risk. Owners who start preparing a year or more before a sale usually get a better price and a smoother process than owners who start when an offer arrives. These are the areas I would look at first.
Financial records
Have clean, consistent financial statements, ideally reviewed or audited, for at least the last three years. Understand your adjusted earnings and be ready to explain every adjustment. Many sellers commission a quality-of-earnings review before going to market, so they find and fix problems before a buyer does. Know your working capital needs, because a purchase price is usually adjusted for them.
Reduce concentration
If a few customers produce most of the revenue, or a single supplier controls a key input, a buyer will see risk and price it. Spend the year broadening the base where you can. Document the relationships that exist and put long-term contracts in place with your most important customers.
Build a team that runs without you
A company that depends on its founder is worth less to a buyer than one that does not. Develop managers who can run day-to-day operations, write down the processes only you know and give key employees reasons to stay through a transition, such as retention agreements or equity participation.
Legal and tax housekeeping
Check that corporate records, ownership, contracts, licenses, intellectual property and employment matters are in order. Resolve disputes or open claims you can resolve. Talk to a tax adviser early, because the structure of a sale, whether of assets or of shares, can change what you keep after tax.
Choose advisers
A sale involves an investment banker or broker, a transaction attorney and an accountant. Interview more than one of each, ask about their experience with companies of your size and agree on fees and scope in writing. Your advisers should also help you think about your life after the sale, including how you will invest the proceeds and what you will do next.
Prepare the data room
Gather the documents buyers will ask for into an organized folder: financials, tax returns, customer and supplier contracts, leases, corporate records, employee information and key policies. A tidy data room signals a well-run company and shortens the time to closing.
This article is general information, not legal, tax, investment or insurance advice. Speak with your own advisers about your situation.
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