When is your company sale-ready?

How do you know whether you are sale-ready now?

There is a simple test and you do not need an adviser for it.

In every acquisition process an Information Request List comes up. That is a list of everything a buyer wants to see. Your financial reports and annual accounts. Your tax affairs, so VAT, payroll taxes and corporate income tax. Your employment contracts and your insurance policies. Your client contracts. Your intellectual property, your brand name and your IT.

Get that list out. Put one of three things next to every item. I can deliver this within a week. This exists, but it is a mess. This does not exist.

That third category is your work list. That is all the test is. And you can do it without any plan to sell.

Why does getting sale-ready take two years?

Because three things cannot be accelerated.

The first is your profit. A buyer calculates with enough history to see whether it is not a fluke. One cleaned-up year is a snapshot.

The second is your dispensability. An agency that still revolves around you today cannot be detached from you in three months. That takes at least a year of really letting go.

The third is your predictability. A forecast you make especially for the sales process is a promise. A forecast that has been held up against reality every month for two years is a track record. A buyer pays for that difference.

That is why you do not start when someone calls. Whoever starts then is already too late and negotiates with the clock as an opponent.

What happens if you are not?

Then what happened to me happens to you.

I was lying on a beach in Croatia with my entire team. Months earlier my bookkeeper had said we had made half a million in profit. I had celebrated it as if we had won the Champions League. A car had been bought, a watch for my father, a more expensive office, higher salaries and this trip.

On that beach my phone rang. Our new controller. That half a million was actually a hundred and fifty thousand. 150,000 euros instead of 500,000 euros.

What turned out: incorrect assumptions, advance payments booked as profit and chaotic project administration. We had not had a bad year. We had had a wrong picture, and we had lived by it.

That was not the beginning and not the end either. For four years I sailed blind. I knew there was money left over. I did not know how much.

And now the part that makes me most uncomfortable. Only at the start of 2021, a few months after my signature, were the numbers finally right. Thanks to the drills of the advisers and the finance director of the new group. Only then did I see it. 2020 had been my best year ever, with one million euros in EBITDA.

I signed on the eve of my strongest months. I was the last one to get to see that.

If you cannot see your own numbers, you do not sell what your company is worth. You sell what your uncertainty whispers to you.

How do you test yourself before a buyer does?

With a dress rehearsal. This is the best idea I know and almost nobody does it.

One of the speakers at Exit Unlocked sold two companies and did the same thing both times. Beforehand an external accountancy firm was hired, with exactly one brief. Make our due diligence as annoying and difficult as possible. Ask all the nasty questions a buyer would also ask.

The real investigation was easier afterwards than the rehearsal. At the signing it even came up on the buyer's side, in a boardroom full of advisers, bankers and lawyers.

That is called vendor due diligence, an investigation you have carried out yourself before the buyer starts. It costs money. It gives you two things that do not fit on an invoice. You no longer have surprises and you can always deliver quickly in the process.

That last point is worth more than it seems. An acquisition is not one negotiation about the price. Every part of the contract is a negotiation, including the warranties and the conditions. Whoever delivers within a day every time is 1-0 up every time.

On the other side of the table it works the same way. An investor I spoke to made the complete sales story and the list of possible buyers before even investing. Two sides of the same table, the same pattern. Whoever does it well investigates themselves before the other party does.

What do you gain if you never sell?

Everything, and that is the point of this article.

Look again at what sale-ready means. A company that runs without you. Numbers that are right before anyone asks for them. Clients who stay and contracts that are in place. That is not a sales trick. That is simply a well-run company.

There is also a negotiating advantage in it that you can only build up in advance. A company that does not have to sell never sells under pressure. Waiting is a position. You only take that position when you are ready.

And it keeps your options open. Stepping back from leadership, gradually handing over to your own people or selling a minority. None of those routes works without this preparation.

What can you do with this today?

Take an hour and make the list from the first section. Three colours, nothing more.

Then put one date in your calendar, two years from today. That is not the day you sell. That is the day you can choose.

Start with the most boring part, because that is almost always the administration. Make sure your monthly figures are on your desk within five working days after the month ends. Without that number the rest of the list is a guess.

Glasnost was my own PR and marketing agency, grown to forty people and in eight years to one million euros in EBITDA. In 2020 I sold it. I was not sale-ready. I was on time for the market and too late for myself.

That is why I do not start with founders at the buyer, but at their own numbers and their own dispensability. Even if selling never becomes the plan.