How to Increase Business Value Before Putting It on the Market

Thinking about selling in the next 6–24 months? The work you do before you list—tightening operations, cleaning up financials, and reducing risk—can lift your valuation multiple, grow net proceeds, and shorten time-to-close. Here’s a practical, seller-focused playbook you can start using today.

What Buyers Actually Pay For (Beyond Today’s Profits)

Most owners assume value = last year’s profit. Buyers look wider. They pay a premium for:

• Quality of earnings (recurring, diversified, defensible)
• Reliable systems (documented processes, strong team, low owner dependence)
• Low risk profile (clean legal/compliance, stable suppliers, transferable IP)
• Clear growth path (pipeline, pricing power, capacity to scale)

Your job pre-sale is to shift more of your revenue and operations into these “premium” buckets.

Organize Financials Like a Buyer Will See Them

Produce banker-grade financials

• 12–36 months of accrual-basis P&L by month, balance sheets, cash-flow statements
• Trailing Twelve Months (TTM) view and a current year forecast
• Revenue and gross margin by product/service line
• AR/AP aging and inventory turns (if applicable)

Normalize EBITDA (Add-Backs)

Clearly document one-time or non-operating expenses to present “true” profitability:

• Owner’s above-market salary and personal perks (documented)
• One-off legal, relocation, or rebranding costs
• Non-recurring repairs, consulting, or R&D pilots
• Duplicate software during a transition period

Tip: Create an Add-Back Schedule (description, date, amount, proof). Clean, defensible add-backs increase adjusted EBITDA and the multiple buyers are willing to use.

Tighten working capital

• Speed up AR (early-pay discounts, automated reminders, stricter credit terms)
• Right-size inventory (ABC analysis, reorder points, dead stock liquidation)
• Renegotiate AP and consolidate vendors for better terms

Why it matters: Buyers price the cash they must tie up on day one. Efficient working capital lifts value and reduces price chips at closing.

Reduce Owner Dependency (Make Yourself “Optional”)

If you’re the rainmaker, chief operator, and head of HR, buyers see risk. Over the next 6–12 months:

• Delegate key relationships to a second-in-command or account leads
• Document SOPs for every core process (sales, onboarding, purchasing, QA, billing)
• Build a leadership bench (even fractional CFO/COO helps)
• Train backups for critical roles; set cross-training goals
• Shift sales to a repeatable system (defined pipeline stages, CRM hygiene, weekly     reviews)

Milestone: You can take a two-week vacation without operations stalling or major customers calling you personally. That’s valuation gold.

Upgrade the Revenue Mix (Quality Over Quantity)

Increase recurring/contracted revenue

• Convert ad-hoc jobs into service contracts, subscriptions, or maintenance plans
• Add auto-renew terms with reasonable out-clauses
• Offer bundled tiers (good/better/best) to stabilize margins

Reduce concentration risk

• If any customer >15–20% of revenue, build an account diversification plan
• Secure multi-year agreements or add secondary accounts within the same vertical

Improve pricing power

• Implement a value-based pricing review (move away from pure cost-plus)
• Add annual escalators linked to CPI or input costs
• Rationalize discounts; establish approval thresholds in your CRM/CPQ

Result: The same top line with stickier contracts and better margins typically commands a higher multiple.

Professionalize Sales & Marketing(Predictable Pipeline)

• CRM discipline: every lead/opportunity logged with stage, probability, next action
• Attribution basics: know where profitable leads come from
• Sales playbook: ICP definition, qualification checklist (BANT/MEDDICC), objection handling
• Weekly pipeline review: forecast accuracy becomes a trust signal for buyers
• Marketing assets: case studies, testimonials, ROI proof, and a clean brand kit

Quick win: Publish 5–10 case studies with measurable outcomes. Buyers love third-party proof your offer delivers results without you in the room.

Operational Excellence (Fewer Surprises, Better Margins)

• Process maps + KPIs for fulfillment, QA, logistics, installations, etc.
• Vendor scorecards (on-time, defect rate, cost variance) and backup suppliers
• Quality controls: checklists, internal audits, and customer satisfaction loops (NPS/CSAT)
• Capacity and bottleneck analysis: document what it takes to add 20–30% volume
• Tech stack tune-up: eliminate redundant tools, standardize data, enforce permissions

Key metric pack to show buyers:

• On-time delivery %, rework rate, warranty claims %
• Gross margin by line, throughput per labor hour, utilization %
• NPS/CSAT, churn %, average contract length, upsell rate
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Legal, HR, and Compliance Housekeeping

Contracts & corporate

• Centralize customer, vendor, and lease agreements (digital, searchable)
• Confirm assignability/change-of-control clauses
• Verify corporate records, minutes, cap table, and state filings

HR readiness

• Clean personnel files, signed IP/NDAs, and non-solicits where enforceable
• Up-to-date handbook, I-9s, and wage/hour compliance
• Documented org chart, role scorecards, comp bands, and bonus plans

Risk management

• Current COIs, appropriate E&O/CGL/cyber coverage
• Safety programs and OSHA logs where applicable
• Resolve or disclose pending disputes with a mitigation plan

Create a secure pre-DD data room (folder schema below) so you’re weeks ahead when buyers request docs.

Suggested Folder Structure

1. Corporate & Cap Table
2. Financials (3 years + TTM, AR/AP, tax)
3. Customers & Revenue (top 50, contracts, churn)
4. Vendors & Supply (agreements, performance)
5. HR & Payroll
6. Legal & Compliance
7. Operations (SOPs, KPIs, capacity)
8. Technology & Security
9. Marketing & Sales (funnel, attribution, content)
10. Insurance & Risk

Intellectual Property & Brand Assets

• Register trademarks, secure domain ownership, and document software licenses
• Ensure all creative/code has work-for-hire or assignment agreements
• Maintain a brand kit (logos, fonts, colors, guidelines) and rights to photos/videos
• For proprietary methods, document as trade secrets with restricted access

Transferable, clean IP reduces friction and builds buyer confidence.

Facility, Equipment, and Cap Ex Reality Check

• Maintenance logs and warranties for major equipment
• Calibration/certification schedules where relevant
• A simple 5-year Cap Ex forecast (what’s due, when, and why)
• Clear lease terms with renewal/assignment provisions

Buyers hate surprise spend. Show them none is lurking.

Tell a Credible Growth Story

Back your narrative with numbers:

• 3-year growth plan with 3–5 initiatives (new market, channel partnership, product tier)
• Unit economics (LTV/CAC, payback, cohort retention) where applicable
• Sensitivity table (base, conservative, upside) tied to real capacity and hiring plans

The best stories show untapped upside the buyer can realize with their capital or platform—without betting the farm.

Quick Wins vs. Longer Plays

30–60 Day Quick Wins

• Clean add-backs; shift to accrual accounting if needed
• Centralize contracts; update COIs; fix missing signatures
• Enforce CRM stages; publish 3 new case studies
• Renegotiate two biggest vendor agreements
• Turn 10–20% of one-off services into simple service plans

3–9 Month Value Builders

• Hire or fractionalize CFO/COO
• Reduce any single-customer concentration to <20%
• Launch annual price escalators and margin guardrails
• Implement NPS/CSAT and close-the-loop process
• Document SOPs for all functions and train backups

Common Red Flags That Depress Value (Fix These Early)

• Financial information with weak add-back documentation
• Customer concentration or no transferable contracts
• Owner-centric sales with no CRM/forecast discipline
• Expired or non-assignable key agreements
• Unclear IP ownership or missing contractor assignments
• High AR aging, dead inventory, or negative working-capital surprises
• Pending legal disputes with no mitigation plan

Metrics & Artifacts Checklist (What to Handa Buyer)

Financial: TTM P&L, 3-yearmonthly P&Ls, balance sheets, cash flow, add-back schedule, AR/AP aging, tax returns
Revenue: Top 50 customers with tenure/spend/churn, contract copies, pipeline report, cohort or retention view
Ops: SOP library, KPI dashboards, capacity/bottlenecks, vendor scorecards
HR: Org chart, role scorecards, compensation bands, signed IP/NDAs, handbook
Legal/IP: Entity docs, minutes, permits, licenses, IP registrations, insurance COIs
Go-to-Market: ICP, sales playbook, win/loss insights, testimonials/case studies, attribution summary

A 90-Day Pre-Sale Sprint (Sample Plan)

Weeks 1–2: Financial clean-up, switch to accrual if needed, draft add-back schedule, build data room structure
Weeks 3–4: Contract roundup: assignability review, updated COIs, vendor renegotiations begin
Weeks 5–6: SOP documentation and cross-training starts; CRM hygiene overhaul; publish case studies
Weeks 7–8: Launch service plans/subscriptions; implement pricing guardrails and annual escalators
Weeks 9–10: HR file audit; finalize org chart and role scorecards; set NPS/CSAT program
Weeks 11–12: Assemble KPI dashboards; finalize growth story and 24-monthforecast; data room QA

Your Exit Strategy Starts Today: Value = Profit× (Confidence in the Future)

Your multiple rises when buyers believe your results will continue without you and see a clean, low-risk path to growth. Start early, document everything, and treat preparation like a product you’re shipping to the market.

Thinking About Selling Your Business?

The sooner you start preparing, the more value you can unlock. At CTA Business Brokers, we specialize in helping Seattle-area owners position their companies for maximum return. From valuation to closing, our team guides you every step of the way—confidentially and with precision.

Contact CTA Business Brokers today to schedule a confidential consultation and discover how to increase your business value before putting it on the market.

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