Prepare to Sell Your Company Before the Buyer Shows Up
By Brent C.J. Britton
The thought arrives like a signal cutting through static. Once you hear it, it does not go away. Maybe you are tired of running the same loop for the tenth year straight. Maybe you ran the numbers and did not expect them to look that good. Good numbers sitting idle are just an unpatched vulnerability. It does not matter whether you built a unicorn on venture money or a very good business installing swimming pools in July heat. The moment you seriously consider an exit, the clock starts, and everything you do in the next few months either compounds in your favor or gets exploited by someone smarter across the table.
The only variable you actually control when a buyer has you in their sights is whether you look like a prime target or a dead company walking.
Paint The House Before You List It
Here is a principle worth carving into the wall above your desk. If your house looks worn before you list it, a fresh coat of exterior paint runs about $2,500 and yet it can add $10,000 or more to the sale price. In M&A, the ‘paint’ is clean financials, well-documented processes, and a legible data room. The math is not subtle. Most people never run the numbers.
Selling a company works the same way, just with more zeroes and lawyers. Buyers pay a premium for certainty and a penalty for noise. A company that reads clean, runs predictably, and can be understood on the first pass through the data room trades at a premium. A company that forces a buyer to squint at your churn rate, guess at your margins, or wonder if the whole operation stops working the day you stop logging in trades at a discount, if it trades at all. Every hour spent making your business legible and shiny before you go to market is an hour that pays mad dividends.
Your Books Cannot Run Corrupted Data
The single most common reason a deal collapses or gets repriced after a signed letter of intent is a quality of earnings problem. Translated out of banker-speak: the buyer’s accounting team ran your numbers through their own diligence and found something that compiled fine on paper but threw an exception the moment they ran it live. Perhaps a large chunk of money you earned last year is used in your projections, but it will never predictably happen again (e.g., lumpiness, one-off contracts, market spikes). Your buyer sees this and either walks or renegotiates downward on the spot. This entire failure mode is preventable. Yet almost nobody patches it in time.
You need three to five years of clean, consistent financial statements, full stop. Very young businesses do transact on less, but shorter histories usually trigger more questions, more structure, and less generosity on valuation.
If you have been running personal expenses through the business, which almost every owner has done at some point, document them now as owner add-backs. They are legitimate. They are expected. They are not a problem, as long as they are disclosed up front instead of discovered later by someone billing twelve hundred dollars an hour to reverse engineer them. EBITDA (or alternatively, trailing 12-month top-line revenues) is the number buyers actually price you on, and in many mid‑market industries such as services, manufacturing, and steady‑growth software, valuation multiples frequently land somewhere in the mid‑single digits, with outliers at the higher end when growth, margins, and market position all line up.
The single highest leverage move available to most sellers is recurring revenue. A company where 70% of revenue renews on autopilot commands a materially higher multiple than an identical company hunting for the next deal every quarter. On a $2 million EBITDA business, even one full turn of multiple is $2 million landing in your account at closing. If any part of your revenue can convert to subscription or retainer, start converting it now, not during diligence.
A Single Point of Failure Is Not a Business
If the company cannot run without you personally in the loop, a buyer is not acquiring a business. They are acquiring a job, and a job is worth a fraction of what a system is worth. Owner dependency is one of the most expensive defects in a small company transaction, and it shows up everywhere: in price, in deal structure, and in the earnout you will be strong-armed into accepting because the buyer does not trust the system to survive without its root user. If the whole operation pauses the moment Player One logs off, your so-called company is just a first-person shooter paying your salary.
Document the processes that currently live only in your head. Build a management layer capable of making day-to-day decisions without routing through you. Put retention packages and double-trigger stock vesting in place for the people who actually run things, so they have a reason to stick around through the transition instead of pushing a new commit to their resume the week the deal is announced. And if a single customer accounts for anywhere north of 20% of revenue, that is an exposed dependency a buyer will price in or structure around, usually in a way you will not enjoy. Start diversifying before you go to market, not after a term sheet tries to make it someone else’s problem.
Audit Your Own Legacy Code
Every business heading to market is running some amount of aging, buggy code: stale agreements, undocumented assumptions, decisions made in year two that nobody revisited in year eight. Finding your own bugs is infinitely cheaper than having buyer’s counsel find them during diligence and use them as leverage.
Start with your corporate records: entity maintenance, IP ownership documentation, shareholder agreements, board minutes. If your cap table is not clean and current, fix it before anyone else sees it. Audit your contracts for assignment and change of control clauses, because plenty of commercial agreements require third-party consent before ownership changes hands, and finding that out during diligence instead of before it removes a variable that bogs down more closings than most sellers realize. Mind you, there are confidentiality concerns in sharing your M&A plans with customers and vendors, but they can be overcome. Ideally, the prospect of selling your company was encoded into your agreements when they were signed.
Run an IP audit. Confirm the company itself, not a founder and not a contractor, actually owns the software, the brand, and the domain names. A contractor who built your platform without a proper work-for-hire agreement may be sitting on a legitimate ownership claim to code you think you already own outright. That conversation is a five-minute patch before a purchase agreement and a very expensive rollback post-close.
Hire the Right Team
The broker or banker running your sale process is arguably the single most consequential hire of the entire transaction. Studies put the valuation premium from using an experienced M&A advisor at roughly 25% over going it alone, which covers the fee (often around 6%) by itself in most cases and then some.
Business brokers handle smaller deals and market your company broadly. Investment bankers run a tighter, more structured process, typically a controlled auction across multiple buyers running in parallel, and bring more analytical firepower to positioning and pricing. Know which tier your deal actually lives in and hire accordingly. Interview more than one. Ask specifically about their history of closed transactions in your industry, not just their pitch deck. Be skeptical of anyone who opens with a flattering valuation before doing any real diligence on your financials. That move is designed to win the mandate, not to serve you.
I am biased, I do this for a living, but here it is in plaintext: your M&A lawyer is not optional, and may need to be someone other than your regular corporate counsel, unless your regular corporate counsel actually handles M&A routinely. Sell-side runs its own playbook. A good deal lawyer helps you populate your data room before the buyer’s team sees it, flags exactly what opposing counsel is going to raise, and helps you build a response before the questions are even asked. LOI to closing, they negotiate earn-outs, reps and warranties, indemnification exposure, and escrow terms. The purchase price is the headline number everyone talks about. The reps and warranties are the mechanism a buyer uses to come back for a piece of it after closing. Getting that part right is the actual job.
Run Your Own Penetration Test
Due diligence is where deals slow down, get repriced, or die outright. The fix is for you and your lawyer to run your own sell-side diligence before a buyer shows up: pressure test your financials, your contracts, your IP, and your regulatory compliance history the way a skeptic will.
Buyer’s counsel doesn’t get paid to nod politely and say everything looks hunky-dory; their job is to minimize post-close downside risk for their client arising from your company’s flaws, so they tend to be hypermotivated to find them. (And if you are getting bought by private equity, the legal team flying lazy circles around you on their behalf will outnumber your lawyers by 10 or 12 warm, caffeine-fueled bodies who will work you over like a swarm of locusts.) So, hunt down your weaknesses yourself and put them out of their misery. Either patch them or have a clear explanation ready before anyone else finds the opening.
Deals are won or lost during the preparation window, and most sellers do not take it seriously until the buyer’s first redline makes it impossible to ignore.
Build a clean, logical data room you can open on day one, not week six. An organized data room signals to a buyer that the whole operation is running current software, not something held together with duct tape and hope. That signal compounds into confidence, and confidence compounds into your price tag. Buyers discount whatever they cannot parse. They pay full price, and sometimes a premium, for whatever they can instantly grok.
Shameless Plug Warning: At Brent Britton Legal, I run sell-side M&A from the introductory phone call through the closing champagne toast, and if you’re already my client, I started prepping to sell your company the day I formed it.
If you are starting to think seriously about an exit, the time to talk to counsel is before the process starts, not after the other side has already found your bugs.
The M&A market is impatient with buggy code. Ship them a clean product.
Paint the house.
About the Author
Brent C.J. Britton is the Founder and Principal Attorney at Brent Britton Legal PLLC, a law firm built for the speed of innovation. Focused on M&A, intellectual property, and corporate strategy, the firm helps entrepreneurs, investors, and business leaders design smart structures, manage risk, and achieve legendary exits.
A former software engineer and MIT Media Lab alum, Brent sees law as “the code base for running civilization.” He’s also the co-founder of BrentWorks, Inc., a startup inventing the future of law using AI tools, and is the author of Ownability.
