Most business owners who want to exit within three years are not ready to go to market today. Not because their business is unattractive. But because the preparation required to achieve the best outcome takes time, and most owners underestimate how much. The businesses that achieve the upper end of their sector's valuation range are the ones where the owner started preparing 12 to 24 months before going to market.
This checklist covers the key actions across five dimensions of exit readiness: financial, operational, management team, deal attractiveness, and personal. The timeframes are structured around an 18-month horizon, but the principles apply whether you are planning to sell in 12 months or three years.
18 to 12 months before going to market
The work done in this phase is the hardest and the most impactful. It involves changing actual aspects of the business. Not just documenting what already exists.
Financial readiness. Ensure your last three years of filed accounts are accurate and up to date. Begin separating any personal expenses from business costs. Identify all legitimate EBITDA add-backs and document them clearly. A buyer's accountant will scrutinise every adjustment you claim. Engage an accountant with transaction experience to review your numbers from a buyer's perspective.
Operational independence. Audit which decisions and relationships are currently dependent on you personally. Begin transitioning key customer and supplier relationships to other senior team members. Document core processes. Particularly anything that currently exists only in your head or relies on your relationships.
Management team. Assess your senior team honestly. Who could run the business if you stepped back for three months? Identify gaps and make a plan to fill them. Through recruitment, promotion, or development. Put employment contracts and non-compete agreements in place for key people.
12 to 6 months before going to market
Customer concentration. If your top three customers represent more than 40% of revenue, address this. New revenue relationships take time to build. Start now. At the very least, ensure those key relationships are held by the business, not just by you personally.
Contracts. Review all major customer and supplier contracts. Are they assignable? Do they contain change-of-control clauses that would require the counterparty's consent on a sale? Resolve any issues before a buyer discovers them in due diligence.
Financial records. Produce management accounts monthly. Buyers expect this and gaps raise questions about financial discipline. Build a three-year financial model showing the growth plan. Buyers want to buy the future, not just the past.
Personal planning. Think seriously about what you want from the sale: full exit, partial, ongoing role? Understand your personal financial position and what the minimum acceptable net proceeds are after tax. Speak to a tax adviser about structuring. CGT planning should begin now, not at completion.
Final 6 months before going to market
- Appoint a corporate finance adviser or business broker. Do not go to market without professional representation
- Begin preparing your information memorandum with your adviser
- Brief your accountant and solicitor. They will need to move quickly once a buyer is engaged
- Prepare your data room: financial, legal, HR, and commercial documents organised and ready for due diligence
- Agree confidentiality protocols. Who in your business needs to know, and when
Frequently asked questions
How long does it really take to prepare a business for sale? For a business that is already well-run and owner-independent, six to twelve months of focused preparation is often sufficient. For businesses where the owner is the key relationship holder, where financial records are not in good order, or where the management team is thin, 18 to 24 months is more realistic.
Do I need to involve my management team in exit preparation? It depends on what needs to change. If the preparation involves transitioning relationships and building management capability, the team will inevitably be involved. Though they do not need to know the exit timeline. If preparation is largely financial and legal, it can be done discreetly with advisers.
What is a data room and why do I need one? A data room is a secure digital folder containing all the documents a buyer will need during due diligence: financial statements, tax returns, contracts, employment records, regulatory certificates, IP documents, and more. Preparing it in advance avoids the chaos of searching for documents under pressure during a live process.
Will preparing for sale make my business better even if I don't sell? Almost always yes. The preparation process forces you to address the things that make a business operationally fragile. Owner dependency, undocumented processes, customer concentration. A business that is ready for sale is generally a better business by any measure.
At what point should I appoint a corporate finance adviser? Most advisers are happy to give an initial assessment well before you are ready to go to market. Often 12 to 18 months ahead. The early conversation is free and helps you understand what you need to do before a formal process begins. Do not wait until you are ready to appoint.