Before you hire an M&A advisor, make your business easier to understand: clarify your goals, organize financial records, learn what drives its value, identify likely diligence issues, and prepare records for controlled review. You can start this work without deciding on a sale price or trying to complete every task alone.
1. Clarify what you want from a sale
Before gathering documents, write down the outcomes and constraints that matter to you. These will help you and any future advisor assess whether a proposed process and transaction fit your circumstances.
- Timing: Is there a date or business event that affects when you might sell?
- Your role afterward: Would you leave at closing, stay for a transition, or consider another arrangement?
- Confidentiality: Who must not learn about a possible sale prematurely, and what information would be especially sensitive?
- Broad deal objectives: What matters besides headline price, such as certainty, timing, or the buyer’s plans for the company?
These are planning prompts, not a standard formula or a universal preparation timeline. The right approach depends on your business, personal circumstances, and jurisdiction.
2. Make the financial picture explainable
Start with the books. A prospective buyer will need to understand the company’s financial position and performance, and you should be able to connect significant figures to supporting records. The U.S. Small Business Administration (SBA) discusses bookkeeping, balance sheets, accounting methods, and accounting help in its guidance on managing a business.
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Review the core records
- Bookkeeping records and the accounting method used.
- Balance sheets and income statements, with the periods covered clearly identified.
- Cash, accounts receivable, accounts payable, and payroll records.
- Support for significant revenue, expenses, liabilities, and other figures that may need explanation.
Organize what already exists and note gaps or inconsistencies rather than changing accounting treatment simply to make the numbers look better. Ask an accounting professional how to address questions about presentation or methods. The SBA says private companies are not required to follow GAAP; that does not mean an owner should change methods without professional advice.
Get help where the records need it
The SBA recommends considering a CPA, bookkeeper, or online accounting service for accounting needs. The right support depends on the condition and complexity of your books. If an earnings adjustment may be important to a buyer, identify the underlying transaction and retain its support; a seller-side practitioner checklist flags unsupported earnings adjustments and weak revenue support as potential diligence friction points (Alehar’s seller diligence checklist).
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3. Understand what a valuation can—and cannot—tell you
The SBA advises obtaining a business valuation before marketing a business. A valuation is an informed assessment based on a method and its assumptions, not a guaranteed sale price. The eventual transaction value also depends on the business and deal terms.
| Approach | Evidence it uses | Judgment and fit |
|---|---|---|
| Income | Projected revenue and risk. | The SBA names the approach but does not rank its judgment requirements or state when it best fits a particular company. SBA guidance. |
| Market | Comparisons with similar businesses sold. | The SBA names the approach but does not rank its judgment requirements or state when it best fits a particular company. SBA guidance. |
| Assets | Assets less liabilities. | The SBA names the approach but does not rank its judgment requirements or state when it best fits a particular company. SBA guidance. |
The SBA also notes that relevant assets can include intangible items such as brand presence, intellectual property, and customer information. Ask a qualified valuation professional which approach or combination of approaches is appropriate and what assumptions drive the result. No single method can be declared the right one for every business based on the SBA’s overview.
4. Take inventory of likely diligence topics
Due diligence is broader than financial statements. Before an advisor is engaged, make a preliminary inventory of what the company has and where it is kept. The categories below reflect practitioner guidance, not a binding checklist for every transaction.
- Corporate and ownership records: formation and governance documents, ownership information, and records needed to establish who can approve a transaction.
- Contracts and relationships: customer, vendor, lease, loan, and other material agreements; note where signed copies or amendments are missing.
- Financial support: records supporting revenue, liabilities, and material expenses, plus documentation for any adjustments to earnings that you may explain.
- People: employee and payroll information, key-person dependencies, and other people-related records relevant to the business.
- Operations and commercial information: important processes, customer and vendor relationships, and records that help explain how the company operates.
- Legal matters: unresolved issues or obligations that may need review by counsel.
Alehar’s practitioner checklist identifies missing contracts, unsupported earnings adjustments, weak revenue support, unresolved legal issues, inconsistent answers, and slow document responses as possible sources of friction. Treat these as prompts to investigate, not proof that a transaction will fail or a universal statement about buyers.
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5. Organize records before sharing them
Create an index and a consistent folder structure for records you have assembled. A secure electronic data room can let parties review documents off-site and work from a shared set of disclosed materials. The Small Business and Technology Development Center’s Guide to Selling a Small Business discusses electronic data rooms in due diligence; Morgan Lewis also notes that advisors may recommend a host suited to the transaction (“Preparation Is Key When Selling a Business: What to Know”).
Preparation is not the same as unrestricted disclosure. Decide with appropriate professional advice what to share, with whom, and at what point in a process. Keep an index of what has been provided and avoid circulating sensitive information casually. The sources describe data rooms as a process aid; they do not establish a preferred vendor.
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6. Decide which professionals to consult
You can begin organizing records before selecting an M&A advisor, but specialized questions may call for different professionals. The SBA points owners toward accounting help, valuation resources, and attorney review of a sale agreement. Morgan Lewis describes M&A counsel, accountants, brokers or advisors, and data-room providers as possible participants in a sale process.
- CPA or accountant: help with financial records, accounting questions, and support for earnings.
- Valuation professional: assess value using methods and assumptions suited to the company.
- Transaction lawyer: advise on legal and deal-specific matters and review sale documents. Relevant M&A experience is useful when choosing counsel.
- M&A advisor: help assess and run a sale process, with responsibilities defined in the engagement terms.
These roles can overlap in timing, and there is no universal order that fits every company. Tax, legal, valuation, and transaction advice should be tailored to your business and jurisdiction.
7. Prepare questions for a prospective M&A advisor
When you are ready to speak with advisors, use your goals and records to make the conversation specific. Ask:
- What company sizes, industries, transaction types, and geographies do you work with?
- Who will handle the day-to-day work, and how do you manage confidentiality and screen prospective buyers?
- What preparation do you expect before buyer outreach, and what will you handle versus the owner’s CPA and attorney?
- How do you form valuation expectations, and what assumptions should I examine closely?
- What fees and engagement terms apply?
Ask for clear answers about roles and assumptions rather than relying on a headline valuation or an assumed standard fee. The appropriate terms depend on the engagement; the cited guidance does not establish a universal commission rate.
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