How to Prepare Your Business for Sale: The 12 Month Checklist

This is the foundation. Everything else depends on clean numbers.

• Reconcile your books. Every bank account, credit card, and loan should be reconciled monthly going back three years. If you are behind, hire a bookkeeper to catch up now.
• Separate personal from business expenses. Stop running personal expenses through the company. Yes, it saves on taxes today, but it suppresses your EBITDA and makes your add backs harder to defend. Start running personal expenses through personal accounts.
• File all tax returns. If you have unfiled returns or extensions, get them done immediately. No buyer or lender will move forward without three years of clean returns.
• Build your add back schedule. Work with your CPA to identify and document every legitimate add back. Start building the paper trail now.

A business that cannot run without the owner is worth significantly less. Start removing yourself from day to day operations.

• Hire or promote a general manager. This person should be capable of running operations when you are not there. If you do not have someone, start recruiting now.
• Transition customer relationships. If your top 10 customers only work with you personally, start introducing them to your team. Buyers will ask about customer concentration and relationship risk.
• Delegate decision making. Stop being the only person who can approve purchases, sign contracts, or handle escalated problems. Create authority levels for your managers.
• Take a two week vacation. Seriously. If the business struggles while you are gone, you have more work to do. If it runs smoothly, that is a powerful data point for buyers.

Buyers pay more for businesses with documented, repeatable processes. This is especially true for service businesses like HVAC, plumbing, and electrical where the owner often carries institutional knowledge in their head.

• Write standard operating procedures (SOPs). Cover every major process: sales, estimating, scheduling, service delivery, invoicing, collections, hiring, and training. They do not need to be perfect. They need to exist.
• Document your vendor and supplier relationships. List every key vendor, your terms, your volume, and your contact. Make sure these relationships are not solely dependent on you.
• Organize your contracts. Gather every lease, service agreement, customer contract, equipment loan, and insurance policy into one place. Review them for transferability and expiration dates.
• Create an employee handbook. If you do not have one, create one. Include policies, benefits, roles and responsibilities, and organizational charts.

Buyers pay premiums for predictable, recurring revenue and they discount businesses with obvious risks.

• Renew key contracts. If you have customer contracts expiring in the next 12 months, renew them now. A buyer does not want to close on a business and immediately risk losing 20% of revenue.
• Diversify your customer base. If one customer represents more than 15-20% of revenue, that is a risk flag. Start actively growing other accounts to reduce concentration.
• Lock in your lease. If you rent your space, negotiate a new lease with at least 3 to 5 years remaining and an option to renew. Short leases scare buyers and kill SBA financing.
• Resolve legal and compliance issues. Outstanding lawsuits, OSHA violations, tax liens, or licensing problems need to be resolved before due diligence.

• Get a professional valuation. Use our free business valuation tool for an estimate, then schedule a consultation for a detailed analysis based on your actual financials.
• Hire your broker or M&A advisor. Interview at least 2 to 3 advisors. Ask about their experience in your industry, their buyer network, their fee structure, and their recent deal track record.
• Engage a transaction attorney. Not your regular business lawyer. You need someone who does M&A transactions regularly and understands purchase agreement negotiation.
• Talk to your CPA about tax planning. The structure of your sale (asset sale vs. stock sale, installment sale, seller notes) has enormous tax implications. Plan this before you go to market, not after you have an offer.

• Build your data room. Organize all financial statements, tax returns, contracts, leases, employee records, and SOPs into a secure digital data room. Having this ready before going to market shows buyers you are serious and saves weeks during due diligence.
• Review and approve your CIM. Your broker will create the Confidential Information Memorandum. Review it carefully for accuracy. This is the first impression buyers get of your business.
• Prepare mentally. Selling a business you built is emotional. Prepare yourself for the process. It will take months. There will be frustrating moments. Buyers will ask questions that feel invasive. This is normal.
• Brief your inner circle. Tell only the 1 to 2 people who absolutely need to know (typically your GM or operations manager). Everyone else finds out after the deal is essentially done.