The two years before you sell: what to fix first
A practical list of the changes that raise a trades or industrial company's value most, in the order to tackle them.
Most of the value in a sale is created before a buyer ever sees the company. Here's the usual order of work for owners who are one to three years out.
Year one: make the numbers buyer-ready
- Move to accrual-basis monthly financials if you aren't already, and have them reviewed by your CPA.
- Separate personal and business expenses so your add-backs are short and easy to document.
- Make sure the earnings you'll market tie to your tax returns. A Free Earnings Check is a quick way to see where you stand.
- Collect your key contracts, leases, licenses and insurance in one place.
Year one to two: take yourself out of the middle
- Name a general manager or operations lead and let them run the schedule.
- Move key customer relationships to that team.
- Get licenses held by employees or the company where your state allows it.
Year two: grow what buyers pay most for
- For trades: sell maintenance agreements and service plans.
- For industrial companies: put repeat customers on master agreements, and reduce dependence on any customer above a quarter of revenue.
- Catch up on deferred equipment and fleet spending, or plan to explain it.
Throughout: plan for after the sale
Work with your CPA and a financial advisor on what you need to net from a sale, and how the deal's structure changes the after-tax result. Owners who know their number make better decisions when offers arrive.
Not sure which of these to start with? Take the Exit Readiness Score.
General information, not legal, tax or investment advice.