Preparing Your Business for Sale: A Practical Exit Readiness Checklist

A comprehensive checklist covering financial, operational, legal, and strategic elements to address before taking your business to market.

Preparing Your Business for Sale: A Practical Exit Readiness Checklist

The difference between a successful transaction and a failed process often comes down to preparation. Business owners who invest time in exit readiness consistently achieve better outcomes—faster timelines, higher valuations, and smoother due diligence. This checklist covers the critical areas to address before going to market.

Why Exit Readiness Matters

Buyers and their advisors have seen thousands of deals. They quickly identify well-prepared businesses versus those that haven't done the work. Poor preparation leads to:

Extended due diligence timelines
Price reductions or re-trading
Deal fatigue and failed processes
Damaged credibility with buyers

Conversely, prepared businesses benefit from:

Competitive buyer interest
Shorter transaction timelines
Stronger negotiating positions
Higher probability of closing

Financial Readiness Checklist

Accounting and Records

[ ] Three years of audited or reviewed financial statements
[ ] Monthly financial reports with consistent format
[ ] Clear accounting policies documented
[ ] Reconciled bank statements and records
[ ] Accurate accounts receivable aging
[ ] Documented accounts payable

Quality of Earnings Preparation

[ ] Identify and document EBITDA adjustments
[ ] Remove non-recurring items
[ ] Normalize owner compensation
[ ] Identify related party transactions
[ ] Document revenue recognition policies
[ ] Prepare working capital analysis

Financial Planning

[ ] Current year budget with variance analysis
[ ] Three-year financial projections
[ ] Key assumptions documented
[ ] Capital expenditure planning
[ ] Working capital requirements understood

Operational Readiness Checklist

Business Documentation

[ ] Updated organizational chart
[ ] Key employee list with roles and tenure
[ ] Customer concentration analysis
[ ] Supplier relationships documented
[ ] Key contracts inventory
[ ] Standard operating procedures

Management and Human Resources

[ ] Management team depth assessment
[ ] Key person dependency analysis
[ ] Employment agreements in place
[ ] Non-compete/non-solicitation agreements
[ ] Incentive plan documentation
[ ] Retention strategy for key employees

Technology and Systems

[ ] IT infrastructure documentation
[ ] Software license compliance
[ ] Data security protocols
[ ] Business continuity planning
[ ] System integration considerations

Legal and Compliance Checklist

Corporate Structure

[ ] Updated corporate records
[ ] Shareholder agreements current
[ ] Clear ownership documentation
[ ] Minutes and resolutions organized
[ ] Good standing certificates

Contracts and Agreements

[ ] Customer contract review
[ ] Supplier agreement analysis
[ ] Lease terms documented
[ ] Change of control provisions identified
[ ] Assignment restrictions noted

Regulatory Compliance

[ ] Industry-specific licenses current
[ ] Regulatory compliance confirmed
[ ] Environmental compliance (if applicable)
[ ] Health and safety compliance
[ ] Data privacy compliance

Intellectual Property

[ ] Trademark registrations current
[ ] Patent documentation complete
[ ] Trade secrets protected
[ ] IP ownership clear
[ ] License agreements documented

Strategic Readiness Checklist

Market Position

[ ] Competitive landscape analysis
[ ] Market share understanding
[ ] Growth opportunities identified
[ ] Competitive advantages documented
[ ] Industry trends analyzed

Growth Story

[ ] Clear value proposition articulated
[ ] Growth initiatives documented
[ ] Investment opportunities identified
[ ] Market expansion potential
[ ] New product/service pipeline

Buyer Identification

[ ] Strategic buyer universe mapped
[ ] Financial buyer relevance assessed
[ ] Synergy opportunities identified
[ ] Buyer motivations understood

Due Diligence Preparation Checklist

Data Room Preparation

[ ] Virtual data room selected
[ ] Folder structure organized
[ ] Index document prepared
[ ] Documents uploaded and organized
[ ] Access controls established

Key Documents to Prepare

[ ] Management presentation
[ ] Financial model
[ ] Customer analysis
[ ] Market overview
[ ] Organizational overview

Timeline Considerations

Exit readiness is not achieved overnight. Plan for:

12-18 Months Before Target Sale:

Begin financial statement preparation
Address known issues
Start management team development
Engage preliminary advisors

6-12 Months Before:

Complete exit readiness assessment
Address identified gaps
Prepare marketing materials
Refine buyer targeting

3-6 Months Before:

Finalize all documentation
Complete data room preparation
Engage sell-side advisor
Prepare management for process

Professional Support

Exit readiness often benefits from professional assistance:

M&A Advisor:

Process management
Buyer identification
Negotiation support
Transaction coordination

Accountant/Financial Advisor:

Quality of earnings preparation
Tax planning
Financial statement preparation

Legal Counsel:

Contract review
Corporate housekeeping
Transaction documentation

Ready to assess your exit readiness? Contact our team for a confidential exit readiness review.

Related Reading: