Exit-Readiness Audit — Sell-Side Preparation Built to Survive Buyer Scrutiny

Last updated: 27 January 2026

Short version: This is sell-side operational due diligence for owner-operated businesses. You get a defendable valuation range, a buyer-grade evidence pack plan, an owner dependency score with a transfer plan, working capital and deal-mechanics exposure, and a practical 100-day Grow to Exit roadmap that reduces price chips and term pressure.

Core idea: In private M&A, the multiple is a trust premium. Trust is built by proof quality, transferability, and deal-mechanics readiness—not by a single headline valuation number.

Apply for Exit-Readiness Audit

If you plan to sell in the next 6–18 months and you want a controlled process with fewer renegotiations, start here. This is the required first step before any sell-side execution engagement.

  • Confidential: You decide who sees what, and when. We work off a staged evidence pack so you do not overshare too early.
  • Scoped to outcomes: You receive a fixed-scope proposal after application with clear deliverables and owner-side inputs.
  • Practical: You leave with a prioritised 100-day plan, not theory.
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Table of Contents

1) What the Audit Is (and what it is not)

The Exit-Readiness Audit is a pre-market system to make your business verifiable, transferable, and financeable before you enter negotiations.

  • It is: principal-led sell-side readiness: operational due diligence, evidence standards, and a transfer plan that makes earnings survive after the owner steps back.
  • It is: a structured way to answer buyer questions before buyers ask them, so you control timing, narrative, and disclosure order.
  • It is not: a generic valuation report, a listing, or “marketing the business”.
  • It is not: legal, tax, or investment advice. It identifies exposures and readiness gaps; your counsel executes jurisdiction-specific work.
  • It is not: a substitute for a formal audit or buyer-side diligence work. It is the readiness layer that stops value bleeding when that scrutiny arrives.
Why this exists: Most deals lose value late, not early. “Price chips” happen when buyers find unpriced risk during diligence. Readiness moves risk discovery earlier—when it is fixable and when you still have negotiation leverage.

2) Who This Is For (and who it is not)

Good fit if you want a controlled exit where valuation and terms hold under scrutiny (not a fragile headline number that collapses in diligence).

  • Your business is owner-operated: revenue, approvals, delivery, or key relationships still depend on you.
  • You expect serious buyers (strategic, competitor, operator-buyer, PE/search fund) and you want to be ready for diligence pressure.
  • You have add-backs or normalisation claims, but documentation is incomplete, inconsistent, or scattered.
  • You want to understand exactly what buyers will punish and how to fix it fast (100-day roadmap).
  • You want to decide with clarity: sell now, wait and fix, or change the deal structure to protect outcome.

Not a fit if:

  • You want a high headline price without evidence, reconciliations, or a transfer plan.
  • You will not share basic operational and financial documents (or refuse to reconcile inconsistencies).
  • You want the advisor to “create value by storytelling” while the business remains founder-dependent and undocumented.
  • You are not willing to change obvious bottlenecks buyers price as risk (key-person dependency, concentration, missing contracts, messy reporting).

3) Outcomes & Deliverables (what you receive)

You receive outputs designed for buyer scrutiny: clear assumptions, explicit evidence standards, and an executable plan that increases transferability and reduces negotiation volatility.

Defendable valuation range
SDE/EBITDA valuation bridge
Buyer objection map
price chips terms risk
Owner dependency score
0–10 transfer plan
100-day roadmap
priority order execution plan
Evidence pack plan
proof standards data room index
Deal mechanics readiness
working capital terms defence

What you actually get (plain English):

  • Exit Readiness Scorecard: a buyer-lens diagnosis of transfer risk, proof gaps, and deal exposures.
  • Valuation Range + Valuation Bridge: how we move from reported earnings to buyer-grade earnings, with assumptions you can defend.
  • Add-Back / Normalisation Evidence Log: each adjustment, the evidence required, and the two-sentence defence that survives diligence.
  • Owner Dependency Score (0–10) + Transfer Plan: what breaks without you, and the fastest realistic path to reduce dependency.
  • Working Capital and Deal-Mechanics Exposure: what buyers will adjust at close, what will be negotiated, and what you can fix pre-market.
  • Deal-Killer Register: issues that can kill the deal or create punitive terms (with remediation sequence and owners).
  • 100-Day Grow to Exit Roadmap: a prioritised plan designed to increase saleability quickly (with effort level, dependencies, and expected impact on buyer confidence).

4) The Buyer Lens: Where Value Gets Chipped

Buyers discount what they cannot verify, cannot transfer, or cannot price cleanly. In owner-operated businesses, these are the usual pain points:

  • Unprovable earnings adjustments: add-backs without evidence get deleted in diligence.
  • Hidden manager cost: “manager-run” claims collapse when the owner is the real operator, salesperson, approver, or firefighter.
  • Owner-only relationships: revenue tied to personal trust, not institutional systems and contracts.
  • Customer/supplier concentration: a few accounts dominate cash flow; buyers price fragility.
  • Working capital distortions: understocking, stretched payables, deferred obligations, or seasonality become purchase price adjustments and post-close conflict.
  • Contract and compliance gaps: missing contracts, unclear terms, undocumented rebates/side-deals, missing licences/permits, informal employment practices.
  • Data and systems risk: messy operational data, weak access control, no backups, poor reporting discipline, key systems run “in someone’s head”.
  • Documentation gaps: missing SOPs, KPIs, governance, dispute history, insurance, or IP documentation increases term-risk.
Buyer behaviour: When uncertainty is high, buyers rarely walk away immediately. They keep negotiating and move value into structure: earnouts, holdbacks, escrows, tighter covenants, wider indemnities, and stricter working capital mechanics.

5) Scope: The 6 Readiness Pillars

5.1 Financial normalisation (SDE/EBITDA)

  • Build the correct earnings base for the business reality (SDE for owner-operator; EBITDA for manager-run after pricing a market manager).
  • Separate recurring operations from one-offs, discretionary spend, and transitional costs.
  • Build a clear “valuation bridge”: what changes post-close, what must remain, and why a buyer should believe it.
  • Identify reporting weaknesses that buyers punish (timing issues, inconsistent categorisation, missing schedules, unexplained swings).

5.2 Evidence quality (proof pack)

  • Define evidence standards for adjustments and claims (what must be shown, not merely said).
  • Reconciliation logic: where feasible, tie financials to bank and tax artefacts to reduce trust gaps.
  • Build an add-back evidence log designed for diligence review and negotiation defence.
  • Specify a staged disclosure plan: what goes into the buyer data room, when, and with what context (so you control narrative and reduce “panic questions”).

5.3 Owner dependency scoring + transfer plan

  • Score dependency across sales, relationships, operations, decisions, and knowledge (0–10).
  • Convert dependency into a transfer programme: delegation, documentation, cadence, accountability, and “independence tests”.
  • Deliver a practical handover structure: what gets documented, who owns it, and how performance is tracked without the owner.
  • Define what is realistic pre-market versus what must be handled via deal structure (consulting period, transition services, earnout triggers).

5.4 Concentration and key-person risk

  • Map revenue by customer and identify contract fragility, renewal risk, and churn drivers.
  • Identify supplier single points of failure and mitigation options (alternatives, inventory policy, contract terms).
  • Identify key staff dependency and retention exposure (what happens if they leave at LOI, during diligence, or post-close).
  • Clarify which risks buyers will price versus which can be fixed quickly pre-market.

5.5 Working capital + deal mechanics

  • Surface working capital exposure and seasonality dynamics (what “normal” looks like operationally, not just in a single headline period).
  • Clarify what stays vs leaves in typical deal framing (cash, debt, liabilities, deferred obligations, owner perks).
  • Prepare for buyer mechanics: what commonly becomes a purchase price adjustment, what becomes a covenant, and what becomes an indemnity discussion.
  • Reduce structural risk by reducing uncertainty: fewer reasons for earnouts/holdbacks/escrows and less scope for last-minute renegotiation.

5.6 Deal killers and remediation priorities

  • Identify diligence killers early (compliance gaps, undocumented liabilities, informal contracts, missing records, unresolved disputes, unclear ownership/IP).
  • Prioritise remediation by ROI and speed: what increases buyer confidence fastest and what prevents catastrophic term risk.
  • Output a 100-day roadmap with a clear priority sequence, owners, dependencies, and “proof outcomes” (what will exist after each fix).
  • Flag “unsellable until fixed” items plainly, without euphemisms.

6) Process (how the audit runs)

The audit runs as a structured diagnostic sprint with explicit outputs. The pace is primarily determined by how quickly the evidence pack can be assembled and reconciled.

  1. Application + fit: objectives, timing, buyer type, constraints, and confidentiality boundaries.
  2. Scope + evidence standards: agree what “proof” means for your numbers and claims; define what we need and what we can ignore.
  3. Data room setup: staged checklist; we start with minimum viable evidence and expand only where it changes outcome.
  4. Owner/operator interviews: map what only the owner does, how sales actually happens, and what breaks without you.
  5. Diagnostic build: normalisation, valuation bridge, risk map, dependency scoring, concentration analysis, deal mechanics exposure.
  6. Buyer objection map: where price chips happen and how to neutralise them with proof, fixes, or structure.
  7. Delivery + decision session: walk-through, hard truths, and decision: sell now vs fix-first vs structure-led strategy.

This is designed to produce a decision and an execution plan, not just an assessment. If you do nothing with the roadmap, nothing improves.

7) Inputs Required (data room checklist)

Minimum inputs to produce buyer-grade outputs (organised beats perfect):

  • Corporate: company registration docs, ownership/shareholding records, group structure, major licences/permits, key policies.
  • Financial: multi-year P&L and balance sheet (where available), trailing period, general ledger exports if possible.
  • Bank and tax artefacts (where available): bank statements, tax filings, VAT/GST filings, payroll filings, any prior audit/review reports.
  • Working capital schedules: AR/AP ageing, inventory reports, debt schedule, leases, capex/fixed assets list.
  • Revenue detail: customer list with revenue by customer, top customer contracts/terms, pricing model, retention/churn indicators if tracked.
  • Supplier detail: top suppliers, key terms, dependency risks, rebates/side agreements if any.
  • People: org chart, payroll list, contractors, incentive/bonus plans, and a map of what only the owner does.
  • Operations: SOPs (if any), KPIs (if any), production/service delivery flow, quality control, warranty/returns policy if relevant.
  • Legal & risk: material contracts, disputes/litigation history, insurance policies/claims, compliance records, IP/trademarks.
  • Systems: key software stack, admin access policy, data backup approach, reporting sources (what produces the numbers buyers will test).

If your documents are incomplete, that is not disqualifying. It becomes a prioritised item in the roadmap. The key requirement is willingness to move from “story” to “proof”, and to fix what buyers punish.

8) How the Valuation Range Is Built (and defended)

The output is a defendable range, not a single “perfect” number. The range is built from the method that matches reality and is defended through evidence quality and transferability readiness.

  • Owner-operator reality: SDE (normalised) with clear add-back evidence and a buyer-grade narrative for what changes post-close.
  • Manager-run reality: EBITDA after a market manager cost, then cross-checks and risk adjustments tied to what can actually be transferred.
  • Asset-heavy/distressed: asset floor logic with cash flow as a ceiling check, plus explicit disclosure of liabilities and capex needs.
  • Defence logic: valuation holds when earnings are verifiable and operational risk is priced or removed (owner dependency, concentration, missing contracts, compliance gaps).
Defence rule: If an adjustment cannot be defended in two sentences and supported by documents, it will be treated as non-existent by serious buyers.

9) Buyer-Proof Templates (copy/paste)

Add-Back Evidence Log

  • Item:
  • Category: discretionary / one-off / transitional
  • Amount:
  • Evidence: invoice / receipt / contract / bank line / ledger extract
  • Why it will not recur post-close:
  • Expected buyer objection:
  • Two-sentence defence:

Owner Dependency Score (0–10)

  • Sales dependency (0–2):
  • Relationship dependency (0–2):
  • Ops dependency (0–2):
  • Decision dependency (0–2):
  • Knowledge dependency (0–2):
  • Total (0–10):
  • Mitigation plan (3 bullets):

Working Capital Readiness Questions

  • What is “normal” AR/AP/inventory operationally (not only in a single reporting period)?
  • What seasonal peaks require additional funding or inventory build?
  • What liabilities, deferred obligations, or customer credits can surprise a buyer at close?
  • What specific mechanics apply if working capital is under/over the agreed level at close?

Deal-Killer Register

  • Issue:
  • Category: legal / financial / operational / compliance / people / systems
  • Deal impact: price chip / term risk / financing risk / deal-breaker
  • Proof needed: what document(s) make this verifiable?
  • Fix plan: action, owner, deadline
  • Buyer narrative: how it is explained, with evidence, without creating new fear

Work With Me: Apply for Exit-Readiness Audit

If you want a valuation range that holds and a process that stays controlled, the starting point is buyer-grade readiness: provable earnings, quantified transfer risk, and deal mechanics defined early.

Apply for Exit-Readiness Audit →

FAQ

Is this just a valuation report?

No. You receive a defendable valuation range, but the core work is sell-side readiness: proof quality, normalisation, owner dependency scoring, transfer planning, and deal-mechanics readiness so the number holds under diligence.

What does the audit change in the deal outcome?

It reduces uncertainty and increases transferability. That typically reduces price chips and improves terms because the buyer can verify and price risk earlier, rather than discovering it late and moving value into structure (earnouts/holdbacks/escrows).

Do you run the sale process too?

This page is the audit (the required first step). Controlled execution through to close is a separate engagement and depends on fit, timing, buyer type, and scope. The audit also tells you whether sell-now is rational or whether you should fix-first to avoid value destruction.

How is pricing handled?

Fees are scope-based. After application you receive a fixed-scope proposal aligned to your complexity, data readiness, and timeline. The audit is priced as senior, high-scrutiny work because it creates the evidence and transfer logic that protects valuation and terms.

What if my books are messy?

That is common. Messy books compress multiples because buyers cannot price risk. The audit forces evidence standards and a remediation plan so you stop bleeding value in diligence. If “clean-up” is required, it becomes a staged set of tasks inside the 100-day roadmap.

How confidential is this?

Confidentiality is a core design constraint. You control staged disclosure (what is shared, when, and with whom). We focus on building a buyer-grade pack and narrative so you can disclose with confidence rather than under pressure.

What do you need from me personally?

Access, speed, and honesty. You will need to provide documents (or grant access to whoever holds them), answer operational truth questions (what only you do), and commit to fixing high-impact gaps if you want the outcome to change.

Will this guarantee a higher price?

No one can guarantee a price. What this does is remove preventable discounts: missing proof, hidden dependency, unclear working capital and liabilities, and narrative gaps that force buyers to protect themselves with harsher terms.

About Den

Den Unglin is a sell-side M&A advisor specialising in owner-operated business exits—where valuation is won or lost on transferability, evidence quality, and deal structure. He builds buyer-grade readiness: financial normalisation that holds under scrutiny, risk frameworks buyers can price, and operational handover systems that make earnings survivable after the owner steps back. Learn more About Den or review the Business Strategy Services.

The Grow to Exit approach is built around Den’s operating system: diagnose the few constraints that suppress multiples, convert owner dependency into a documented transfer plan, and package the business as a clean, financeable asset—so value is defended through diligence and the exit closes on terms.

Disclosure: Informational only; not legal, tax, or investment advice. Transaction outcomes depend on jurisdiction, buyer type, financing conditions, and case-specific facts.