Start preparing your small business for an exit today, or risk leaving value on the table when you sell.
by Jessica Nikolich
Most Business Owners Start Preparing Too Late
If you’re a business owner somewhere in the $5M–$75M revenue range, the idea of an eventual exit is probably floating in the back of your mind. Maybe it’s years away. Maybe it’s sooner than you’re admitting. Either way, there’s one thing I hear consistently from the advisors who work these deals: by the time most owners start preparing, they’re already behind.
I sat down with Brock Brady, a business broker and M&A advisor at Freeman Lundt, for the latest episode of the CFO Chats series. Brock works in the lower middle market – the space where most privately held businesses actually live – and he had a lot to say about what separates deals that close cleanly from deals that blow up.
If a future sale is anywhere on your radar, this conversation is worth your time.
In this episode:
How far in advance you actually need to be preparing for business exit
Three deal-killers that business owners rarely see coming
Why having a strong CFO involved is one of the most reliable value accelerators Brock sees in deals today
What quality of earnings actually means and how Brock thinks about it
What’s happening in the lower mid-market M&A environment right now
CFO Insight:
The owners who get the best business exit outcomes are the ones who’ve been running their business like it could be sold at any time; clean financials, documented processes, and no surprises when a buyer starts digging.
Brock shared that in the current market buyers are becoming a lot more selective. What that translates to is a more robust financial due diligence process, where unfortunately too many deals fall apart because the financials lack rigor, cannot be easily explained and don’t give buyers the confidence they need to move forward.
In Brock’s words:
Having a strong CFO involved is one of the most reliable value accelerators I see in mid-market deals today.
~Brock Brady
That’s not a marketing line – that’s a business broker who closes deals for a living telling you what actually moves the needle.
What does that look like in practice?
A CFO who has been involved in the business prepares the financial narrative before due diligence starts. CFOs explain adjustments, defend the numbers, and present the business’s performance in a way that holds up under scrutiny. They anticipate the questions buyers are going to ask and have clean, credible answers ready. That kind of preparation doesn’t just make the process smoother – it protects your valuation.
As a business owner, investing in your financial operating system is one of the highest-leverage things you can do in the 2–3 years before you go to market. You should be getting your financials onto an accrual basis if they aren’t already, documenting your revenue composition, cleaning up owner-related expenses, and building the reporting cadence that gives a buyer confidence in what they’re acquiring.
If you’re starting to think about an eventual business exit – even if it’s three or four years out – it’s worth having a frank conversation about where your financials stand today. Our Financial Health Diagnostic is a good place to start. It surfaces the gaps that tend to create problems in due diligence — before a buyer finds them first.
Follow The Series:
This is part of an ongoing series of conversations with experts who help business owners build stronger, more resilient companies.
