Whilst a number of conversations I have had regarding exit or sale readiness have been positive, there are many business owners who have spent years building something valuable only to walk into a sale process underprepared and are likely to come out having left money on the table, accepted terms they did not fully understand, or watched a deal collapse when it should have been straightforward.
The most common reason is not wrong advisers or the wrong buyer. It is that they started thinking about exit too late.
Management accounts that tell a coherent story
Buyers will want at least three years of management accounts. What they find too often is a collection of monthly reports in slightly different formats, with cost lines that have moved around and no consistent narrative thread. Building accounts that tell a clear story for example revenue by segment, margin by product or service line, overhead categorised consistently cannot be done retrospectively. It has to be built forward, starting now.
Normalised EBITDA takes longer to establish than you think
Many SME sales are valued on a multiple of normalised EBITDA adjusted for owner remuneration, one-off items and related-party transactions. Establishing a credible normalised figure requires clean records, consistent accounting treatment and a clear narrative that a buyer's due diligence team can follow. If your accounts have been managed primarily for tax efficiency, this normalisation becomes complicated. Starting to separate trading clarity from tax efficiency two or three years before a sale makes a material difference.
Key person risk and the financial narrative
One of the most consistent valuation discounts is key person risk — the perception that value will leave when the owner does. Addressing this means demonstrating that client relationships are institutional, operational knowledge is documented, and a second tier of management can run the business without daily owner involvement. Building this takes years, not months.
The owners who sell well are also the ones who have spent time thinking through their business from a buyer's perspective developing a narrative about why it has grown, how defensible the margins are, and what the opportunity looks like under new ownership.
We’ve teamed up with Geoff Kwateng and experienced M&A Advisor who broadens our capability in this space.