Two Years to Transaction-Readiness


A business owner who incorporates pre-due diligence into normal business operations well in advance of offering the business for sale, can build value, be better organized and more prepared for a sale offer. The discovery process for pre-due diligence is not completed over night but it is a smart investment towards a successful and profitable outcome for an eventual exit. It provides the owner with an accurate baseline to enhance the value of their company and move towards being transaction-ready.

Five key benefits to pre-due diligence business discovery:

1.   Deeper insight into the business;

2.  Time to fix broken business drivers which can add immense value to a company

3.  Removing the risks in the business which ultimately affects the owner's life;

4.  Puts the owner in the buyer’s shoes and allows an objective assessment of the operation.

5.  Benchmark the business against similar industry competitors.


    Due-diligence is the process by which a prospective buyer of a business conducts a legal, financial and general business operation investigation in preparation for a possible purchase transaction.

    Pre-due diligence is an early seller-side discovery done well before entering a potential sale; ideally,  years before. This analysis tells owners what the value of the company is and identifies any broken business drivers or risk factors. The Discovery Process should include a personal financial review for a complete picture. Business owners can then see a full view of business and personal financial status, built with details and insights.


    'How much money would I have if I sold right now?'


    The benefit of early pre-due diligence is owners will have the time to enhance the value of the business by fixing what is wrong and eliminating risk. In many cases this can take two years or more, due to restructuring for tax reasons, the need to enhance operational performance, etc. Additionally, this analysis done properly answers the question, 'How much money would I have if I sold right now?'

    The answer provides a reality check for current personal net worth plus the value of the business. With this information, business owners can consider how much money they need to exit or retire which works towards building value to achieve that goal.


    Gathering critical information for pre-due diligence can be tedious, stressful and take longer than anyone expects. Having outside expertise to lead the process allows the owner to stay focused on running and growing their business. Engaging with an advisor who will work to understand the owner's business and life situation, and who has a network of trusted exit advisory specialists at hand, can take an otherwise potentially painful experience and turn it into a profitable and rewarding one.


    By completing a business and personal discovery process, the owner will have the opportunity to address any issues that could arise from a buyer. Thinking like a buyer, being objective, means a lot of the red flags that may arise will already be dealt with through the results of pre-due diligence analysis and organization. When it comes time to sell, red flags are dealt with and corporate documentation is organized making the sale process more time efficient and less stressful.


    The business owner's investment in pre-due diligence discovery and organization is as important as the running of the business on a daily basis. Ensuring normal business processes like bookkeeping, communications, client and supplier records, and work scheduling are documented enables smooth operations - and transition of the company. Being organized for transition means the owner and advisor has defined or prepared the following critical documents:

    • Corporate Organizational Chart
    • Corporate Records; Share Registry & Company History Files
    • Corporate & Personal Tax Returns & Assessments (3-5 years)
    • Key Personnel & Employment Contracts
    • Human Resources Files; Compensation & Benefit Plan
    • Inventory of Business Processes; Systems; License Agreements
    • Capital Asset Summary
    • Corporate Strategic Plan & Personal Financial Plan
    • Customer and Supplier Relationships
    • Intellectual Property
    • Contracts; Leases; Financial Agreement like Lines of Credit, Loans, etc.
    • Personal Net Worth (without the Business Value)
    • Family Genogram, Wills, Corporate Key Man & Personal Insurance, etc

    Many businesses will 'just get by' in having some structure to their records. But if an exit or sale is planned, this hyper-organization allows the owner and advisor(s) to view all documents at a glance. It can then be determined what is missing, where conflicts exist and what areas need attention. Critical business decisions are easier because the owner is prepared to react. For the owner and any advisors working on the business transition,  this saves money, time and quite often - the opportunity itself.


    When the time comes to exit, a transition to sale can now be more likely structured the way the owner wants.  This means the owner can:

    • Maximize value in of their company;
    • Be organized and ready for the sale of the business;
    • Establish the maximum dollar for the business and move contented towards the next phase of life; and
    • Align with the best M & A advisor and other professionals that are a good fit for them and their business.

    Business owners who delay pre-due diligence are leaving money on the table. The more work put in up front, the better chance of selling the business on the owner's terms. Why? Because the seller will be “Transaction-Ready!”


    Read more about how business owners can build value in their companies

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    Set up a no-obligation 30-minute call with John to discuss how the Discovery Process can lead you to a more strategic succession plan.