What this tool does
A short diagnostic that scores how ready your financials are for a buyer's diligence. quality of earnings, working capital, customer concentration, add-backs, historical cleanup, entity structure and documentation.
How to read the result
- Buyers do not pay for a good year. They pay for a defensible one, and defensible means it survives someone else's accountant.
- Costs added back to profit are where most value is argued away. Each one needs support that existed before the sale process started.
- Customer concentration is a valuation input, not a footnote. One customer above roughly 20% changes the multiple.
- Cleanup is cheap eighteen months out and expensive in diligence.
Questions we get asked
When should this be run?
Twelve to twenty-four months before you intend to sell. Anything found later gets priced into the deal.
What is a quality of earnings review review?
A buyer's accountants rebuilding your earnings on their own definitions. The exercise is much easier when your books were built on consistent ones.
Does Averan run a sale process?
No. We prepare the financial side so your banker and attorney can run one. Sale preparation is our part.
What the diagnostic scores
- quality of earnings: whether your reported profit survives someone else's definitions
- Cash to run the business day to day: whether a normal level can be evidenced from your own history
- Customer concentration: how much of revenue and profit rests on the largest few accounts
- Costs added back to profit: whether each one has support that existed before the process began
- Historical cleanup: how far back the books are consistent
- Entity structure and documentation: what a data room would be missing today
Where to next
- Sale preparation, the work behind a clean set of books for a buyer
- Path to Sale, the structured program
- Fractional CFO, for the forecast a buyer will test
- Talk to us
Run the diagnostic
Eight dimensions a buyer tests, scored, with the issues that would re-trade a deal. Nothing is saved unless you ask for the result in writing.
Run the diagnostic →What this measures
A buyer does not price the business you run. They price the business they can verify, and the gap between the two is what this scores. It walks fifteen checks a buyer's diligence team will run, and tells you which ones you would fail today.
The output is not a valuation. It is a list of what would slow a deal down, in the order a buyer would hit it.
What to put in
- How many years of clean, closed financials you can produce without rebuilding them.
- Whether earnings can be shown without the owner's own compensation tangled through them.
- Whether revenue is contracted, recurring, or won again each year.
- How much of the business depends on you personally, by relationship or by decision.
- Whether customer concentration would trouble a lender.
- What sits in the books that a buyer would adjust out.
How to read the answer
Anything scored red is not a reason not to sell. It is a reason the price gets renegotiated late, which is the expensive way to find out.
Most items on the list take six to eighteen months to fix properly, which is why this is worth running two years before you plan to sell rather than two months.
Where it usually goes wrong
- Waiting until a buyer is at the table. Every item on the list is cheaper to fix without one.
- Treating add-backs as free money. A buyer's quality of earnings team tests each one and disallows what it cannot document.
- Assuming the last three years count. A buyer weights the most recent twelve months most heavily, and the trend more than either.
Questions this raises
- What does sale preparation actually involve?
- How does the path to sale run?
- Is my business worth more than it pays me?
- What does a clean monthly close look like?
If the diagnostic returns more red than you expected, sale preparation is the work that clears it, and it starts with the books rather than the pitch.