Exit Readiness Score

How to read this result

Exit readiness measures how prepared the business and the shareholders are for a sale process: the evidence, reporting, contracts, management and strategy a buyer and their advisers will test. Each of the fifteen areas is scored from one to five, converted to a nought to one hundred scale and weighted by the influence it usually has on buyer confidence, valuation and transaction timetable. The score is not converted into a valuation multiple or a discount, because no reliable universal adjustment exists. A high score does not mean a business is ready to launch for sale: adviser and buyer scrutiny will still be required.

Your five strongest areas

• Monthly financial reporting: 50 of 100
• Documented and evidenced adjusted EBITDA: 50 of 100
• Owner dependency: 50 of 100
• Customer concentration management: 50 of 100
• Management depth: 50 of 100

Your five priority areas

• Monthly financial reporting: 50 of 100
• Documented and evidenced adjusted EBITDA: 50 of 100
• Owner dependency: 50 of 100
• Customer concentration management: 50 of 100
• Management depth: 50 of 100

Ninety-day action list

• Monthly financial reporting: Produce monthly management accounts within 15 working days of month end, with a reconciled balance sheet and a short commentary on variances.
• Documented and evidenced adjusted EBITDA: Build a line-by-line adjusted EBITDA schedule for the last three financial years, attaching evidence to every add-back and deduction.
• Owner dependency: Transfer the top ten customer relationships to named team members, document pricing authority, and take a deliberate four-week absence to test and evidence independence.
• Customer concentration management: Measure your top one, three and five customer shares, contract the largest relationships on longer terms, and evidence a pipeline that does not rely on one account.
• Management depth: Map each critical function to a named manager, fill the largest gap, and put appropriate retention or incentive arrangements in place before a process starts.

Financial preparation

• Monthly financial reporting: Produce monthly management accounts within 15 working days of month end, with a reconciled balance sheet and a short commentary on variances.
• Documented and evidenced adjusted EBITDA: Build a line-by-line adjusted EBITDA schedule for the last three financial years, attaching evidence to every add-back and deduction.
• Revenue and profit trajectory: Prepare a three-year trend analysis with a written explanation of each material movement, and a current-year forecast supported by monthly actuals.
• Working capital, cash and debt clarity: Produce a 12-month working-capital profile, identify genuinely surplus cash, and schedule all debt-like items including finance leases, unpaid tax and declared dividends.

Commercial risk

• Customer concentration management: Measure your top one, three and five customer shares, contract the largest relationships on longer terms, and evidence a pipeline that does not rely on one account.
• Recurring or contracted revenue evidence: Separate contracted revenue from repeat revenue in your reporting, and produce a contract register showing term, notice period and renewal basis.

Management and owner transition

• Owner dependency: Transfer the top ten customer relationships to named team members, document pricing authority, and take a deliberate four-week absence to test and evidence independence.
• Management depth: Map each critical function to a named manager, fill the largest gap, and put appropriate retention or incentive arrangements in place before a process starts.

Legal and operational evidence

• Legal, regulatory and intellectual-property housekeeping: Commission a pre-sale legal housekeeping review covering statutory books, share history, licences, data protection, employment and intellectual-property ownership.
• Customer, supplier and employee contracts: Build a central contract register, obtain signed copies of anything missing, and note change-of-control and assignment provisions for the largest relationships.
• Documented systems and processes: Document the ten processes that would cause most disruption if a key person left, and assign each an owner and review date.
• Data-room preparation: Create an indexed data room covering financial, legal, commercial, people, IT and operational information, and review it internally for gaps before buyers see it.

Sale strategy

• Shareholder objectives and preferred outcome: Hold a documented shareholder meeting to agree target timing, minimum acceptable cash at completion, appetite for deferred consideration and each shareholder's role after completion.
• Buyer proposition and likely buyer universe: Research trade, financial and overseas buyer categories, and write a short equity story setting out why the business is worth more to each of them than to a generic buyer.
• Tax and transaction structure reviewed: Obtain specific tax advice on shareholder relief eligibility, share and group structure, and the treatment of deferred and earn-out consideration before heads of terms.

Issues likely to affect valuation

• Monthly financial reporting: Buyers discount earnings they cannot verify month by month, and lenders will not support a full price without reliable reporting.
• Documented and evidenced adjusted EBITDA: Unevidenced add-backs are removed in diligence, which reduces the price directly.
• Owner dependency: Owner dependency is one of the strongest downward influences on the multiple a buyer will pay.
• Customer concentration management: High concentration commonly leads to a lower multiple, deferred consideration or an earn-out linked to retention.
• Management depth: Management depth is a primary driver of where a business sits inside its sector range.
• Revenue and profit trajectory: A falling or volatile trend moves a business towards the bottom of its sector range.

Issues likely to delay diligence or completion

• Monthly financial reporting: Weak reporting is the single most common cause of extended diligence and repeated information requests.
• Documented and evidenced adjusted EBITDA: Adjustment challenges late in a process trigger price renegotiation.
• Owner dependency: It usually produces longer handover commitments, tied consideration and earn-out structures.
• Customer concentration management: Buyers usually request customer contracts, churn history and sometimes customer calls, which adds time.
• Management depth: Buyers will meet the team. Gaps found late reduce confidence and reopen price discussions.
• Revenue and profit trajectory: Unexplained movements invite deeper sampling and lengthen the financial diligence period.

Report warning

• This score does not confirm that a business is ready to launch for sale.

Suggested next steps

• Monthly financial reporting: Produce monthly management accounts within 15 working days of month end, with a reconciled balance sheet and a short commentary on variances.
• Documented and evidenced adjusted EBITDA: Build a line-by-line adjusted EBITDA schedule for the last three financial years, attaching evidence to every add-back and deduction.
• Owner dependency: Transfer the top ten customer relationships to named team members, document pricing authority, and take a deliberate four-week absence to test and evidence independence.
• Customer concentration management: Measure your top one, three and five customer shares, contract the largest relationships on longer terms, and evidence a pipeline that does not rely on one account.
• Management depth: Map each critical function to a named manager, fill the largest gap, and put appropriate retention or incentive arrangements in place before a process starts.