I took over a sell-side engagement involving a mechanical contractor out of the Triad, solid HVAC and plumbing revenue, strong recurring service agreements, a reputation built over 22 years. The owner had done everything right as an operator. What he hadn’t done was prepare for what comes after the decision to sell.
Before I was involved, a buyer’s team arrived with a financial analyst, a quality of earnings specialist, and a transaction attorney who had run this process hundreds of times. The seller’s side had a bookkeeper and a CPA who had never seen a deal of this size. Within two weeks, there was a retrading conversation that cost the owner $400,000. Not because the business wasn’t good but because the story wasn’t told right, and the liabilities surfaced before the seller had a chance to frame them. That deal never closed. We rebuilt the process and sold the business two years later, but the owner paid for those two years in time, energy, and market exposure.
Sophisticated Buyers Come Prepared. Sellers Often Don’t.
Whether I’m working with a telecom infrastructure company in South Carolina, an equipment dealership along the I-95 corridor in Virginia, a wholesale distributor outside Wilmington, or an electrical contractor in the Carolinas, the pattern is consistent. Buyers show up with teams purpose-built to find risk. If a seller hasn’t found that risk first and addressed it, the buyer will find it and use it.
This isn’t adversarial, it’s just how the process works. A buyer’s quality of earnings team has done this dozens of times. For most sellers, it’s the first time. That asymmetry is real, and it shows up in price.
What Thirty-Six Months of Preparation Looks Like
A manufacturing client in the Piedmont spent 36 months getting ready. We resolved two shareholder loans, settled a lingering workers’ compensation claim, updated every customer contract, and rebuilt the financial presentation around three years of normalized, well-documented EBITDA. When the buyer’s QofE team arrived, there were no surprises. Every question they asked had an answer that was already prepared. The deal closed above the owner’s original expectations.
That outcome wasn’t accidental. It was the result of treating preparation as a disciplined process benchmarking the business the way a buyer would, long before any buyer was in the room.
Four Things I Tell Every Owner Before We Start
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- Confidentiality matters from day one. Once employees, customers, or suppliers sense a sale is coming, uncertainty spreads faster than you can manage it. Keep the circle small and deliberate.
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- Second, your financials need to speak a buyer’s language, three to five years of clean, well-documented statements that a QofE team can reconstruct without friction.
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- Third, resolve open liabilities before they become negotiating leverage against you. A known issue that you’ve addressed is a footnote. One a buyer discovers is a price adjustment.
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- Fourth, know which employees are critical to the business post-close, and have a plan for retaining them. A buyer will ask about this on day one.
The Question Worth Asking Now
Your business may be operationally ready. The question worth asking is whether it’s transaction-ready. Those are different standards, and the distance between them is where value is either protected or lost.
Tully Ryan is CEO of IQExit and an M&A Advisor with Murphy Business. He serves business owners and the advisors – CPAs, bankers, wealth advisors, and attorneys – who sit alongside them.
Tully Ryan welcomes questions, comments, and conversations from business owners and their advisors.
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