Mathilde Lacombe

Selling a company is one of the most consequential financial moments an owner will ever face. The steps you take in the twelve to twenty-four months before a sale can influence valuation, taxes, negotiating leverage, and your family’s financial security for years to come. Early preparation turns a distracting, stressful process into a focused project with clear milestones and fewer surprises.

Start With a Clear Timeline and Decision Map

Begin by setting a target window for launching the process and a shortlist of events that could shift timing. Examples include a major contract renewal, product release, facility move, or key executive hire. Build a simple decision map that answers three questions. What must be true before you take the company to market. What will you do if market conditions or buyer interest change. Who decides and on what cadence. This framework keeps the team aligned and reduces last minute pivots that erode credibility with buyers. It also helps you coordinate personal planning with corporate milestones so your household is ready for a liquidity event when it arrives.

Upgrade Financials to Investor Grade

Buyers pay for clarity. Commission a sell side quality of earnings review well before marketing. This independent analysis validates revenue recognition, normalizes margins, and highlights adjustments that should be excluded from run rate results. Close stale accounts, reconcile intercompany transactions, and document all nonrecurring items. Standardize monthly reporting so key metrics roll up the same way every period. If possible, align your chart of accounts with common industry templates to simplify comparisons. The goal is not to paper over weaknesses. It is to present the economics of the business in a way that an informed buyer can digest quickly and defend to an investment committee or credit partner.

Manage Working Capital Like a Seller

Working capital mechanics can quietly move millions between parties at close. Begin tracking days sales outstanding, days payable, and inventory turns with weekly precision. Tighten credit policies where slippage has crept in and accelerate slow moving inventory reduction plans. Review vendor terms and consider locking in favorable arrangements that do not impair flexibility. Model a working capital peg based on the trailing twelve months and anticipate seasonal patterns that might cause disputes during negotiation. Clear documentation and consistent discipline help you avoid last week scrambles that hand bargaining power to the other side.

Optimize The Capital Structure and Off-Balance Sheet Obligations

A simple, well documented capital structure makes diligence faster and reduces legal expense. Map every debt instrument with covenants, prepayment terms, and change of control provisions. Confirm that liens are properly filed and that no unexpected consents are required. Review leases, customer prepayments, rebates, warranties, and long-term service obligations that might affect enterprise value or debt-like adjustments. If you hold minority stakes or have joint ventures, assemble clear records of governance rights, drag and tag provisions, and transfer restrictions. Buyers dislike uncertainty. Eliminating it early keeps attention on performance rather than clean up.

Model Taxes and Cash Flow Across Scenarios

Tax outcomes can vary dramatically depending on entity type, structure of consideration, and deal mechanics like earnouts or escrows. Build a multi-size tax model that compares asset sale, stock sale, and potential Section 338 structure if applicable. Quantify state and local exposure, net investment income tax, and any international issues. If philanthropic goals are part of your plan, evaluate whether pre-sale contributions of appreciated shares or a charitable vehicle would create better after-tax results than writing checks after close. Bring your advisor team together to review the model so the legal structure you negotiate matches the economics you intend.

Integrate Business and Personal Planning

The balance sheet that matters most after close is your own. Before you sign a letter of intent, update your household cash flow plan, insurance coverage, and legal documents. Map how sale proceeds will be held across accounts and entities, and decide who will manage liquidity and investment tasks during the transition. Coordinate beneficiaries, powers of attorney, and trustee roles so administrative work does not bottleneck when attention turns to the deal. Before you sign, make sure your post‑sale plan reflects the life you actually want to live; think of wealth preservation as the thread that ties together your investment policy, risk controls, and account structure after the deal.

Build A Data Room That Tells the Story

A well-organized data room signals competence and reduces diligence fatigue. Start with a clean index that follows the sequence buyers expect. Corporate documents, financial statements, tax filings, customer and supplier contracts, HR policies, IP and technology, legal matters, and environmental or safety records where relevant. For each section, include a brief overview memo that explains context, recent changes, and known risks with mitigations. Redact sensitive information thoughtfully rather than reflexively. The objective is to give buyers confidence that they are seeing the real picture, which shortens timelines and limits re-trading.

Protect Momentum with Communication and Contingency Plans

Sale processes often coincide with a leadership bandwidth crunch. Decide in advance who handles day-to-day operations, who manages diligence requests, and who speaks to employees, customers, and suppliers at each stage. Create concise templates for updates to lenders and key partners so messages are consistent. Draft a contingency plan for a deal pause or a buyer who walks late in the game. This might include a modest capital raise, a pricing change, or a renewed focus on a growth initiative that was paused for the process. Clear roles and backups keep performance steady, which is itself a form of negotiating leverage.

Prepare Yourself for Life After Close

The deal is not over when the wire hits. Many owners transition into earnouts, consulting agreements, or board roles that require new habits. Outline what an ideal post-close year looks like for you and your family. Consider a short sabbatical to decompress and avoid rushed investment decisions. Establish a governance cadence with your advisors that includes a simple dashboard of liquidity, spending, asset allocation, and tax projections. If you plan to start another venture, define the guardrails that will protect the capital you worked to create. Clarity now prevents drift and regret later.

Conclusion

Owners who prepare early improve more than price. They reduce friction, shorten timelines, and keep control of the narrative. By upgrading financials, managing working capital deliberately, cleaning up the capital structure, modeling taxes, and integrating personal planning, you set the stage for a smoother process and a stronger life after the sale. The result is confidence at the table and options when the next chapter begins.