What a buyer actually looks at first

Buyers form a view of your company in the first two hours of looking at your financials. Here is what they are looking at.

1. Whether the statements tie

Does the P&L tie to the tax return? Does the balance sheet roll forward correctly? Does cash on the balance sheet match the bank? If the answer to any of those is no, everything else you say gets discounted — not because the business is bad, but because the buyer now has to verify each claim independently, and that costs them time and you multiple.

2. Revenue quality

Customer concentration, contract length, recurring versus one-time, and churn. A business with one customer at 40% of revenue trades at a different multiple than the same business with twenty customers at 5% each. You cannot fix this in the last six months, which is exactly why it is worth looking at years ahead of a sale.

3. Add-backs that survive scrutiny

Owner salary above market, personal expenses run through the business, one-time legal costs — these are legitimate adjustments to EBITDA. But every one needs documentation behind it. An add-back schedule with support gets accepted. One without gets negotiated away, and each rejected dollar costs you the full multiple.

4. Whether the business runs without you

If you are the top salesperson, the estimator, the relationship with the three biggest customers and the person who signs every check, a buyer is not buying a company — they are buying a job with your name still on the door. Key-person dependency is the most common reason otherwise-good small companies sell at a discount or do not sell at all.

The window

Most of this takes twelve to twenty-four months to fix properly. Which means the right time to start getting buyer-ready is roughly two years before you want to be talking to buyers — and the second-best time is now.