FAQ
Questions owners ask
About getting ready. Questions about the sale process itself belong with a broker.
How long before selling should I start preparing?
Twelve to twenty-four months is typical when there are genuine gaps in more than one area. Six to twelve months is enough when the business is fundamentally sound and only two or three specific items need work. Under six months, most of what could have been changed has already been decided.
What is the most common reason a business does not sell?
The business cannot run without the owner. It is the most common problem, the hardest for an owner to see, and the slowest to fix, because a buyer wants to see a track record of someone else making decisions and a track record takes time to accumulate.
Do I need a valuation before I start preparing?
Not first. The more useful early question is what you need to net after tax and fees to fund what comes next. A valuation without that number has no context. Once you have both, the gap between them is the thing that preparation is trying to close.
What does it mean for a business to be owner dependent?
It means the owner decides things nobody else can decide: pricing outside the normal range, which job slips when two collide, how to handle a supplier who misses, what to do about a key employee threatening to leave. Documentation helps but does not resolve it. Someone else has to actually be deciding.
How much customer concentration is too much?
Buyers and lenders start to get uncomfortable when a single customer passes roughly 25% of revenue, and above 40% it becomes the central issue in the deal. Getting the largest relationship under a transferable contract helps even when the percentage does not change.
Should I clean up my books before or after I get a valuation?
Before. A valuation built on books that a buyer cannot verify will not survive diligence, so you would be paying for a number that gets rebuilt later. An outside accountant, a real chart of accounts, and personal expenses separated properly come first.
Do I have to stop running personal expenses through the business?
Not necessarily, but they have to be identifiable to the transaction level. A buyer will add back legitimate owner expenses when calculating earnings. They will not add back anything they cannot trace, which means undocumented personal spending reduces the earnings the business gets valued on.
What is an add-back?
An add-back is an expense on the profit and loss statement that a new owner would not incur, added back to earnings to show what the business actually produces. Owner salary above market, personal vehicles and one-off legal costs are common examples. Add-backs only count if they are documented.
Can I prepare a business for sale without hiring anyone?
Much of it, yes. Documenting process, delegating decisions, getting the largest customer under contract and taking two weeks genuinely off are all things an owner can do without paying anyone. Accounting cleanup usually needs an outside accountant, and a formal readiness assessment usually needs an advisor.
Is exit planning the same as selling my business?
No. Exit planning is the work before a listing exists: making the business transferable, deciding what you will do afterwards, and working out whether the numbers fund it. Selling is the transaction, handled by a broker or an investment bank. Preparation and listing are separate decisions.