I’ve bought, sold, and structured deals for years, and one lesson keeps proving itself. If you want a top exit, you can’t wing it at the signing table. You must position your company to be sold long before any buyer shows up. That means three to five years of intentional prep before the closing you’re dreaming about.
The tactic too many founders miss
Early offers feel flattering. They also trap unprepared founders. Private equity groups throw out aggressive Letters of Intent (LOIs), then grind the price down later. I’ve watched it happen again and again. It’s not personal; it’s the playbook.
“People will throw LOIs at you early stage… by the time you get through the due diligence phase… they’ll use that to then come back to you and say, hey. The valuation we originally gave you… we wanna massage it.”
By the time the LOI hits, many founders are already emotionally sold. That’s when the haircut happens. Due diligence is where your price goes to die—unless you’ve done the work in advance.
My stance: build to sell years in advance
I believe in building a company that is easy to buy. That means strong compliance, clean books, protected IP, repeatable processes, and an executive team that runs the machine without you. If the business is built around you, the buyer will discount it. If it runs on systems and leaders, the buyer will pay for it.
“Is the company built around you or is it built around an executive team?”
This isn’t theory. I’ve seen valuations drop because a founder was the rainmaker, the operator, and the brand. Buyers don’t want a personality; they want a durable asset with cash flow they can trust.
What buyers will use against you
Here’s what gets poked during diligence, then priced into a lower number. Handle it now instead of bleeding later.
- Compliance gaps: missing licenses, weak controls, or poor governance.
- Messy financials: accrual vs. cash issues, adjustments, or unvetted add-backs.
- Trademarks and IP: unclear ownership, expired filings, or disputes.
- Key-person risk: you as the hub for sales, ops, or vendor ties.
- Customer concentration: one or two clients making up most revenue.
Each of these is a price lever. Fix them before a buyer finds them.
The smarter path to a premium exit
Want leverage in a sale? Prepare early and make the diligence process boring. Boring companies sell for better prices. They face fewer adjustments because they’re clean, steady, and easy to trust.
- Start 3–5 years out: set a sale date and reverse-engineer readiness.
- Professionalize the numbers: audited or reviewed statements, clean add-backs.
- Harden your IP: filings current, assignments clear, counsel in place.
- Build a real leadership team: documented roles, incentives, succession.
- Diversify revenue: reduce reliance on any one client or channel.
- Document processes: SOPs that survive leadership changes.
- Run mock diligence: invite a third party to “break” your business before buyers do.
Some will argue that speed beats preparation. I disagree. Quick exits can work in hot markets, but they are fragile. When tides turn, unprepared founders pay for shortcuts in their multiples.
Emotional discipline is part of the job
LOIs are not victory laps. They’re opening bids. Don’t fall in love with a number that hasn’t survived diligence. Keep multiple bidders warm, keep running the company like you won’t sell, and let the data carry your price, not your hope.
“By the time you get a LOI, a lot of entrepreneurs are getting emotionally invested in the exit… you need to do that work before that occurs.”
I’ve made a career out of structuring low-risk, high-reward deals. The secret is simple: remove surprises. Buyers pay more when there’s less they can use to cut your price. That’s what positioning does.
Final thought and next steps
Set a sale window now. Build the team and systems that make your business easy to buy. Run a mock diligence this quarter and fix what it reveals. You earn your multiple years before the term sheet. Start earning it today.
Frequently Asked Questions
Q: When should I begin preparing my business for a sale?
Plan on three to five years of preparation. That window lets you clean up financials, reduce key-person risk, and prove stable, repeatable results.
Q: How do I avoid a valuation drop after signing an LOI?
Eliminate surprises. Tighten compliance, get reviewed or audited statements, document processes, and secure IP. The fewer gaps, the fewer price cuts.
Q: What’s the biggest red flag buyers find in diligence?
Key-person risk. If the company relies on the founder for sales or operations, buyers discount the price to account for that fragility.
Q: Do I need multiple bidders?
Competition helps. Keeping several qualified buyers engaged reduces the chance of a post-LOI squeeze and strengthens your negotiating position.
Q: What’s a simple first step to get ready?
Run a mock diligence with a trusted advisor. Let them “break” your business on paper and create a punch list to fix over the next 6–12 months.
