How to prepare a business for sale in 12 months

A business is rarely sold when it is ready. More often the owner decides to sell and then finds the accounts are incomplete and everything depends on them. A year of preparation gives time to fix the main things and sell for more.

Months 1–3: get the numbers in order

• tidy the accounting and management reporting for recent periods;
• work out normalised profit: remove one-off and personal items;
• list the debts and liabilities;
• gather the licences, contracts and incorporation documents.

Months 4–6: less dependence on you

• document the key processes and write procedures;
• move key clients to managers and put contracts in the company’s name;
• appoint heads of areas with clear targets.

Months 7–9: stronger and steadier

• raise the share of recurring revenue where possible;
• reduce dependence on a single client or supplier;
• remove what clearly drags profit down: loss-making lines, needless costs.

Months 10–12: ready for a deal

• assemble the document folder for the buyer’s review;
• re-measure the value and compare it with the start;
• decide on the type of buyer and prepare a short description of the business.

Why measure at the start and at the end

A valuation before preparation shows what pulls value down and where to start. One after shows how much the picture has changed. Without measuring it is easy to spend a year on things a buyer will not value.