Preparing your business for sale
A twelve-month sequence, in the order that actually compounds — what to fix first, what to leave alone, and which preparations buyers can tell were done last month.
Most sale preparation happens in the last eight weeks, which is the one window in which it does not work. A buyer can tell the difference between a business that was run well and a business that was tidied recently, and the second raises more questions than it answers.
Here is the sequence that compounds.
Months 1–3: reduce dependence on yourself
The slowest change and the most valuable, which is why it goes first.
- Name the owner of each of your top ten customer relationships — if it is you ten times, that is the project
- Introduce a second contact on every account above 5% of revenue
- Write down the three decisions only you currently make, and delegate one
- Take two consecutive weeks off and record what breaks
- Document the process behind whatever generates the most revenue
The two weeks off is not symbolic. It produces a list, and that list is the actual preparation plan.
Months 2–6: fix the accounts
Not creative accounting — legibility. A buyer's first act is to rebuild your earnings figure from the raw accounts, and every unexplained line lengthens that process and lowers their confidence.
- Separate personal costs out of the business entirely, and stop adding new ones
- Restate owner compensation at a genuine market rate for the work done
- Apply the same normalisation to all three years, not just the most recent
- Reconcile the management figures to the statutory accounts, and keep them reconciled
- Collect the evidence for every add-back now, while you still remember what it was
Common valuation mistakes covers what happens when this is skipped.
Months 3–9: improve revenue quality
Margin work is faster but ages badly. Revenue quality work takes longer and is far harder to fake.
Concentration. Above 25% in one customer costs a turn on the multiple. You cannot fix that in a year by losing the customer — you fix it by growing the rest, which is why the work starts early.
Contract tier. Converting repeat customers to twelve-month agreements moves revenue up two tiers, often at unchanged price. How recurring revenue affects valuation covers what that is worth.
Churn measurement. Start a year out so you present a trend rather than a number nobody can verify.
Months 6–10: clear the legal ground
Unglamorous, and it kills more transactions than price ever does.
| Check | What goes wrong | Cost of fixing it late |
|---|---|---|
| IP assignment from freelancers | The company does not own its own product | Weeks, sometimes a renegotiation |
| Employment contracts on file | Key staff with no notice period | Buyer requires retention terms |
| Customer contracts assignable | Change-of-control clauses | Consent from every customer |
| Supplier terms documented | Key terms agreed verbally | Price protection lost |
| Shareholder agreement current | Terms nobody has read since 2018 | Delay at signing |
Months 9–12: build the file
Everything a buyer will ask for, assembled before they ask. Three years of accounts and management figures, revenue by customer by year, contracts, the org chart, the capex history, the normalisation schedule with its evidence.
The point is not tidiness. A buyer who receives a complete file moves faster, asks fewer defensive questions, and is measurably less likely to reduce their offer during diligence — because the mechanism for reductions is the discovery of things you had not mentioned.
What not to do
Every item in the right column raises this year's EBITDA and lowers what a buyer believes about next year's. They are recognised immediately by anyone who has done this before, and they cost more than they add.
Start by finding out where you are
Preparation without a baseline is guesswork. Knowing the current range, and which assumption moves it most, tells you which of the four blocks above is worth your next twelve months.