Phase one of four
How to prepare a business for sale
To prepare a business for sale, finish four pieces of work a buyer will test before anyone sees it: financials built for a buyer, a growth story with evidence, a business that runs without you, and diligence answers ready before a buyer asks. With FNDRS that starts with the Go-To-Market Analysis, then phase one of the sale: the financials rebuilt, the confidential information memorandum (CIM) and the teaser written, and your approval of the CIM before any buyer sees it.
Signing to the wire: seven to twelve months. Every time given here is an estimate drawn from past engagements, not a commitment. Each sale runs on its own calendar, set by how ready and how complex the company is, by the buyers and their lenders, and by the lawyers on both sides. We set a calendar with you at kickoff and revisit it as the process moves. The sale, phase by phase
What it involves
What does preparing a business for sale involve?
Preparing a business for sale is four pieces of work a buyer will test, all finished before anyone sees the business: financials built for a buyer, a growth story with evidence, less owner dependence, and the diligence file. Phase one of the sale turns them into four outputs. Buyers read three of them: the rebuilt financials, the CIM, and the anonymous teaser. The fourth is the buyer list, which you see before anyone on it is approached.
- Financials a buyer can rely on: books built for a buyer, not for tax, with every adjustment documented
- A growth story with evidence behind it: the numbers that show where the next dollar comes from
- Owner dependence reduced: customers, decisions, and relationships that no longer run through you
- The diligence file built before diligence starts: the questions answered before a buyer asks them
Before phase one
What happens before phase one?
The Go-To-Market Analysis (GTMA) comes first: a buyer's view of the business before anyone commits to a sale, run by Scott Stepanik, our Director of M&A. It opens with a discovery meeting of an hour or so, asked from a buyer's side of the table. You send three years of income statements and balance sheets and the trailing twelve months, a session with your CPA goes through every expense line to find every add-back that can be defended, and a second meeting sets three paths side by side, all cash, rolled equity, or keep growing, with the total proceeds of each after five years.
It is $10,000, flat, and credited in full against the fee for the sale if you engage us for it. It is not a valuation: it shows what a buyer would see. Then you decide whether to go to market, keep building, or hold, and nothing goes to market before the engagement is signed.
The Go-To-Market AnalysisPhase one
What happens in phase one?
Phase one turns the work into what a buyer reads: the financials rebuilt to the standard an institutional buyer expects, the CIM and the anonymous teaser written, and the CIM approved by you before it is designed for buyers. These are its steps, from the sale's calendar.
What happens
- Onboarding: the plan, the documents, and who does what
- The financials rebuilt to the standard an institutional buyer expects
- The confidential information memorandum (CIM) and the anonymous teaser written
- You review the CIM, and it is designed for buyers once you approve it
Who holds the clock
- You
- Documents, answers, and your review of the CIM
- The deal team
- The financials, the CIM, the teaser, and the buyer list
The checklist
The checklist for preparing a business for sale
Three groups, in the order they come: the Go-To-Market Analysis and the engagement before phase one, the four outputs of phase one, and the decisions in phase one that are yours alone. Every item is on this page; tick them off as you go.
Before phase one: the Go-To-Market Analysis and the engagement
Why it matters: The deal workbook is built from them, and a buyer will start from the same statements.
Why it matters: It finds the yellow and red flags a buyer would read as risk, and where the business sits in its industry's range.
Why it matters: Every add-back a buyer's quality of earnings review will test is defended or dropped here, before a buyer sees the list.
Why it matters: Your numbers stay between you and the deal team until you decide to go further.
Why it matters: Three paths side by side, all cash, rolled equity, or keep growing, show the total proceeds of each after five years.
Why it matters: It is the first gate, and the Go-To-Market Analysis before it does not commit you to a sale.
What does phase one produce?
Why it matters: A buyer underwrites the earnings it pays for, and its quality of earnings review tests them against these statements.
Why it matters: It is what every buyer who signs an NDA reads, and the story it tells is the one buyers price.
Why it matters: It is the first thing a buyer sees, before any NDA, so it has to interest a buyer without revealing who you are.
Why it matters: The business goes only to buyers you have seen first, so the list decides who competes for it.
Which decisions are yours in phase one?
Why it matters: They are left out at your direction, so the sale reaches only the buyers you choose.
Why it matters: The phase runs on your clock as well as ours: documents, answers, and your review of the CIM.
Why it matters: It is the second gate: the CIM is designed for buyers only once you approve it.
Why it matters: Your employees and customers learn about the sale when you decide they should, not from a buyer.
The two gates
What are the two gates before a buyer sees the business?
The engagement and the CIM: nothing goes to market before the engagement is signed, and no buyer sees the CIM before you approve it. Both gates are yours to open, and each is in the sale's calendar.
Gate one: the engagement
The engagement is signed. Nothing goes to market before it.
Gate two: the CIM
You approve the CIM. No buyer sees it before you do.
Dependence
How does owner dependence affect the sale price?
Buyers price what transfers, so a business that cannot run without its owner sells for less, and some owner-dependent businesses do not sell at all. Moving relationships and decisions to the team is finished before anyone sees the business, not at the term sheet.
- Buyers price what transfers, not what you carry in your head
- Moving relationships and decisions to the team is slow, visible work
- Some owner-dependent businesses do not sell at all
of the companies we assess have undocumented processes. 68 of 108 companies with written constraint lists.
Ready to go
Is the business ready to go to market?
It is ready when it is both valuable and transferable: it runs without you, its numbers are clean, and its licenses and contracts move. A valuable business that a buyer cannot take without you is a trapped asset, which buyers price with earn-outs and long transitions.
The Go-To-Market Analysis tells you which side of that line the business is on, from a buyer's side of the table, before a buyer does. What a buyer finds in diligence, and the fix for each, is a list of its own.
A founder on preparing
What the preparation looked like from the owner’s chair, and what it was worth.
David Ortiz CEO and president, In-Line · California
Questions
Questions owners ask before they commit
Phase one has no fixed length: where the business starts decides how much work each piece is. Clean financials, a built diligence file, and less dependence on you are each finished before anyone sees the business. The sale as a whole usually takes seven to twelve months from signing to the wire, for a company that is ready; every time given here is an estimate drawn from past engagements, not a commitment. That is a reason to start the conversation now, not to wait until you feel ready.
A sale costs a retainer and a success fee, and the Go-To-Market Analysis before it is $10,000, flat. The analysis is credited in full against the fee for the sale if you go on to engage us, and the retainer is credited against the success fee. The figures depend on the size of the business, so we set them with you on a call. On a sale we run for you, you are the only one who pays us; a buyer pays us nothing.
No: preparation runs beside the business. The point is to make the growth you already have easier to prove, not to pause it.
Your deal team and the people you name. Nothing is shared with a buyer in phase one.
The work still counts, because clean financials and lower dependence help in any sale, on any date. For the sale itself, the process page walks through the four phases.
Find out where you stand today
Bring us the business as it is, now. We will tell you what a buyer would question, what it would take to fix, and what the routes to the number you have in mind look like.