Preparing Your Business for Sale: A 12-Month Timeline
A quarter-by-quarter plan for getting a business ready to sell in about a year. What to fix first, and what it buys you.
Not every business owner has the luxury of a three year timeframe to plan an exit. Many have far less, but that doesn’t necessarily mean that a savvy seller can’t take immediate steps to better position their business for sale.
A roadmap
If you only have a year, spend the first quarter cleaning your books, the second reducing how much the business depends on you, the third strengthening margins and resolving known risks, and the fourth assembling documents and going to market. The payoff could show up as a higher price, a faster sale, and a much lower chance the deal collapses in diligence.
The year at a glance
| Quarter | Focus | Key outputs |
|---|---|---|
| Months 1–3 | Assess and clean up | Defensible valuation, three years of clean books, named risk list |
| Months 3–6 | Reduce owner dependence | Documented processes, delegated relationships, diluted concentration |
| Months 6–9 | Strengthen and resolve | Better margins, lease extended, key risks cleared |
| Months 9–12 | Prepare to launch | Document package, tax plan, advisory team, go to market |
Months 1 to 3: Assess and clean up
Get a valuation and a plan. Start with a realistic opinion of value so you know an anticipated sale price. See how much your business is worth.
Clean up your financials. Get three years of books accurate, organized, and reconciled to your tax returns. Identify and document your personal add-backs so they can be counted toward your full earnings.
This is the most important preparation work of the year, because everything a buyer does flows from your financials. The earnings measure buyers use is defined under seller’s discretionary earnings.
Identify your risks. With your business advisor, list what you think buyers will ask questions about: the amount of owner dependence, your customer concentration, your landlord and lease terms, key employees, and your margins. These become your priorities to improve and address for the rest of the year. The exit readiness assessment scores your business on these factors in about five minutes and flags which one to fix first.
Months 3 to 6: Reduce owner dependence
Start documenting how the business operates and its dependence on you. How many of the operational details are not documented? Begin delegating key relationships and decisions to your team. If you are the top salesperson or the master technician, start building the bench that can do that work without you.
You will not finish this in three months, but you can make real progress, and a buyer can see that the work is underway.
This is also the time to address customer concentration. Begin adding customers to dilute oversized accounts, and where possible move large relationships onto contracts. More on this is in maximizing value before you sell.
Months 6 to 9: Strengthen the numbers and clear the risks
Focus on profitability. Shed unprofitable customers or product lines, raise prices where you have room, and cut costs that are not carrying their weight. Buyers value earnings rather than revenue, so this work raises value directly.
Resolve the issues on your risk list:
- Extend a short lease and confirm it can be assigned, which matters most for location-dependent businesses
- Secure key supplier relationships, or identify alternatives
- Put agreements in place with essential employees
- Clear up any legal or compliance matters
Every issue resolved now is one that will not surface as a surprise in due diligence later. What causes deals to fall apart is covered in five mistakes that derail a sale.
Months 9 to 12: Prepare to launch
Assemble your document package. Everything a buyer or lender will ask for, organized and ready. When you can produce a document on request, diligence moves faster. What buyers ask for is covered in due diligence: what to expect as a seller.
Do your tax planning. Meet your CPA to model the after-tax outcome and structure the deal accordingly. Some of this has to be set up before the sale, so do not leave it to the end. What you keep after costs is defined under net proceeds.
Assemble your team. Line up your transaction attorney, CPA, and broker so you go to market with experienced people already in place.
Go to market. With the business improved, the numbers clean, the risks resolved, and the documents ready, you are taking a prepared business to market rather than a business that still needs work.
What a year of preparation buys you
- A higher price, because you raised earnings and reduced the risks a buyer would otherwise discount for
- A faster, smoother sale, because clean books and a ready document package keep diligence moving
- A lower chance the deal falls through, because the problems were surfaced and fixed ahead of time
If you have more time than a year, the fuller version is in the three-year exit plan.
If you are somewhere inside a twelve-month window and want to know what to fix first, reach out.
Mark Herrmann is the founder of Trustmark Mergers & Acquisitions in Charlotte, North Carolina. This article is general information, not legal, tax, or financial advice.