How to Prepare Your Business for an M&A Advisory Engagement

The best time to prepare for a sale is 12–24 months before you engage an advisor. Second best is right now.

Get the financials in shape

• Three years of clean, GAAP-consistent P&Ls and balance sheets
• Monthly financials, not just annual
• Add-backs documented as they happen, not reconstructed later
• Consider a proactive quality-of-earnings review

Reduce concentration risk

Any customer over 10% of revenue is a diligence issue. Any customer over 25% is a valuation issue. If you can diversify before the process, do it.

Build a real management team

Buyers pay more for businesses that don't require the owner in every decision. A capable second-in-command, documented processes, and a clear org chart materially increase valuation.

Clean up the legal file

• Signed customer contracts, not handshake deals
• Employee agreements including confidentiality and IP assignment
• Corporate records, cap table, and shareholder agreements
• Resolve any pending litigation or disputes

Get the story straight

Why does the business win? What's the growth story? What are the risks and how are they managed? If you can't answer those in three minutes, a buyer won't either.