Prepare for sale

How do I prepare the company for sale?

All businesses, especially small ones, have weaknesses. Because this is part of the normal development cycle of a company, the best way to handle hard truths is head-on and early in the process before buyer and seller have burned through considerable resources.

Here are the 5 most common areas of weakness that should be fixed prior to sale, or addressed directly during diligence:

Category	Weakness	How to Address It
Owner & Team	Owner holds top relationships, leads strategy, is the expert High turnover	Leadership development and systems-building
Customers	Concentration (high % of revenue from one or a few) Customers aren’t buying year over year, or are buying less Warranty claims	Prepare the data to show the “reason codes” for why it happened and why it’s unlikely to happen again
Financials	A recent spike in your performance (and asking a buyer to pay a multiple of the spike) Off-the-books records (paying suppliers in cash, or your yacht captain as a consultant)	Spend time with the buyer normalizing one-time revenues and expenses
Legal	Litigation (ongoing, recurring, or the threat of) Contractors vs. Employees	If the sum is small, settle it; or have a professional check it out and follow their recommendation
Non-business factors	Threatened divorces Not-so-silent “silent” partners Arrests/convictions Tax liens Public problems	Most buyers will move beyond almost anything if you proactively disclose and explain

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