Preparation is what separates a good sale from an excellent one. These 12 steps, based on our experience as buyers, maximise your company's value before going to market.
In more than fifteen years of buying companies in the Spanish middle market, I have learned to distinguish quickly between a company that is prepared for sale and one that is not. The difference is measured not only in price — though a prepared company can achieve multiples 20-30% higher — but also in the speed of the process, the probability of closing, and the seller’s satisfaction with the final result.
Review the last three to five years of financial statements and identify items that need adjustment: owner-related expenses, one-off items, above-market family salaries, and personal assets on the company’s balance sheet. The normalised EBITDA is the starting point for every valuation conversation.
If your accounts are not audited, consider engaging an auditor for the most recent two years. Audited accounts dramatically increase buyer confidence and reduce due diligence friction.
Remove non-operating assets, settle intercompany balances, and address any contingent liabilities. A clean balance sheet simplifies the valuation and reduces buyer concerns.
A company that depends on the founder for daily operations is worth less than one with a capable, independent management team. If gaps exist, fill them — ideally twelve to eighteen months before going to market.
If any single customer represents more than 15-20% of revenue, make active efforts to diversify the customer base. Customer concentration is one of the top risk factors that suppress valuations.
Convert informal arrangements — with customers, suppliers, landlords, and key employees — into formal contracts. Buyers value certainty, and verbal agreements provide none.
Address outstanding legal disputes, tax contingencies, regulatory compliance gaps, and employment issues. Every unresolved issue that surfaces during due diligence creates an opportunity for price renegotiation.
Prepare a comprehensive data room with all corporate, financial, tax, labour, commercial, and regulatory documentation. A well-organised data room is one of the strongest signals of a professional, well-managed company.
Understand your working capital cycle and optimise it: accelerate collections, negotiate payment terms with suppliers, and manage inventory efficiently. Working capital adjustments are a standard feature of M&A transactions, and a well-managed cycle benefits the seller.
Address any deferred maintenance on facilities, equipment, or technology. Buyers will discount for capex that they will need to invest post-acquisition.
Engage an M&A advisor, corporate lawyer, and tax advisor well before going to market. The best advisors are booked months in advance, and the preparation phase requires their input.
Understand the realistic valuation range for your company, based on its sector, size, financial performance, and qualitative characteristics. Unrealistic expectations are the single biggest cause of failed sale processes.
Preparation is the highest-return activity in the entire sale process. The twelve steps described above require time, effort, and sometimes difficult decisions — but the payoff, in terms of higher valuations, faster processes, and more satisfying outcomes, is consistently demonstrated in our experience as buyers.
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
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