Thinking about selling or recapitalizing? Get buyer-ready before you go to market.
Exit readiness means a buyer can verify your earnings quickly and finds no surprises in diligence. That requires accrual-basis financials, normalized EBITDA with documented adjustments, defensible forecasts, clean contracts and an organized data room, ideally prepared 6 to 12 months before a sale. Capstone CFO prepares the finance side of the transaction and supports you through diligence.
Six signs you are not exit-ready yet
These are the issues that most often reduce price or slow a deal down.
Earnings are hard to verify
Financials are cash-basis or inconsistent, so buyers apply their own adjustments, rarely in your favor.
Add-backs are undocumented
Owner expenses and one-time items are known informally but not supported with evidence.
Customer concentration is unclear
You have not analyzed revenue by customer, contract or cohort the way a buyer will.
The business depends on the owner
Key relationships, decisions and knowledge sit with one or two people.
Documents are scattered
Contracts, leases, tax filings and corporate records would take weeks to assemble.
No view of value drivers
You do not know which metrics move your valuation or how you compare to what buyers expect.
Why it happens
Private companies are run to minimize taxes and keep things simple, which is sensible day to day. Buyers, however, look at the business through a different lens: sustainable earnings, risk and how easily they can verify both.
Quality of earnings reviews and buyer diligence expose every gap between those two views. Each one is an opportunity for a buyer to lower the price, add escrow or walk away. Preparing early lets you fix issues on your own timeline instead of the buyer's.
What good looks like
- Two to three years of accrual-basis, reconciled financials
- Normalized EBITDA with documented, supportable adjustments
- Revenue analysis by customer, product and cohort
- A forecast buyers can test and believe
- A complete, organized data room
- A management team that can run the business without the owner
From first conversation to closing
How we prepare owners and sponsors for a transaction.
Readiness assessment
We review financials, reporting, contracts and processes the way a buyer would and rank the gaps by impact on value.
Fix and normalize
We clean up historical financials, document adjustments and strengthen reporting, controls and key metrics.
Prepare the materials
We build the financial model, quality of earnings support and data room, and help shape the financial story.
Support the deal
We work alongside your banker, attorney and CPA to respond to diligence and support negotiations through closing.
What you get
Work that protects value whether you sell next year or in five.
Exit readiness assessment
A prioritized list of financial, reporting and documentation gaps with recommended fixes.
Normalized EBITDA schedule
Adjusted earnings with supporting documentation for each add-back.
Quality of earnings support
Preparation for, and responses to, buyer or third-party quality of earnings reviews.
Data room
Organized financials, contracts, tax, HR and corporate records ready for diligence.
Financial model and forecast
A defensible projection that supports valuation discussions.
Value driver analysis
The metrics that most influence valuation in your sector and how to improve them.
Where this fits
Further reading
Frequently asked questions
How far in advance should I prepare to sell my business?
Ideally 6 to 12 months before going to market. That allows time to clean up financials, document adjustments, reduce owner dependence and build a track record that supports the valuation you want.
What is a quality of earnings report?
A quality of earnings (QoE) report is an independent analysis, usually commissioned by a buyer or seller, that tests whether reported earnings are accurate and sustainable. It reviews revenue, adjustments, working capital and other items that affect value.
Do you replace an investment banker or M&A attorney?
No. We prepare and manage the finance side of the transaction and work alongside your banker, attorney and CPA, so each advisor can focus on their role.
Can you help with acquisitions as well as sales?
Yes. We support buy-side work such as financial due diligence, acquisition models and integration planning, as well as sell-side preparation and recapitalizations.
Considering a sale in the next few years?
Start with an exit readiness assessment and know where you stand.