Selling Your Business Is a Journey — Here’s How to Prepare for the M&A Climb

Last year, I completed a “Rim-to-River” hike to the bottom of the Grand Canyon and back. I joined on a whim with a friend who had already “been there, done that.” Twelve hours after we set off, I made it out — very (very) sore and tired, but proud.

My friend, however, was the true hero of the story. She mapped out the distances between rest stops, planned enough food and water, tracked the sun to avoid the worst heat, and pushed us just enough to finish before dark. I probably could have made it on my own, but the experience would have been very different. Without her preparation and guidance, I wouldn’t have fully understood what was ahead — or the risks of starting out without enough food, water, or planning. Instead of just surviving the hike, I enjoyed it.

The process of selling a business is quite similar. Can you sell your company without preparation? Sure, it happens all the time. But like a tough hike, the journey is much more successful when you understand the terrain, anticipate hazards, and surround yourself with the right team. Unlike a difficult hike, where the biggest regret might be embarrassment or fatigue, the consequences of poor preparation in a business sale are real. Sellers can leave significant money on the table or later regret how they transitioned the most important asset they own.

Before starting the journey, it helps to look at the map. Knowing the M&A process from a high-level view can assist owners in anticipating challenges, maximizing value, and reaching their destination with fewer surprises.

Preparing for the Journey

The process of selling a business starts long before talking to a buyer. Like packing a backpack before a big hike, preparation greatly increases the chances of success — and in this case, the value you end up getting. Ideally, planning begins three to five years ahead of a transition. Even if that timeline can't be met, making good use of whatever time is available can still make a real difference. Pre-transaction planning is basically “reverse engineering” the valuation and due diligence process.

Most business owners have heard terms like EBITDA and working capital, but understanding how buyers use these metrics can reveal opportunities to increase value. For example, if a company is valued at a multiple of EBITDA, improvements can have a multiplying effect on the purchase price. At a five-times multiple, increasing EBITDA by $100,000 could translate into an additional $500,000 in value. At seven times, the same improvement could increase value by $700,000.

Working capital is another area where sellers can unintentionally lose value. Too much or too little working capital in the business at closing can directly affect the proceeds the seller receives. Managing these factors in advance helps avoid surprises later in the process.

Organizing Business

Contracts and corporate records are another essential focus during preparation. Buyers depend on the business's continuity after closing, so anything that supports steady, recurring revenue enhances its value. This often includes well-organized, easily accessible written customer contracts. When possible, sellers should ensure that key contracts can be assigned to a buyer without a lengthy approval process. Buyers also expect corporate records to be complete and well-maintained. Disorganized records or unresolved ownership issues can raise concerns and slow down negotiations.

Appearance matters. Loose ends — such as disputes with former owners, unclear equity rights, or undocumented arrangements — can cause buyers to question what other issues might exist. Other steps that can boost value include reducing owner dependence, building a strong management team, securing key employees, confirming ownership of intellectual property, and addressing customer concentration risks. All these efforts make the business easier to understand, evaluate, and ultimately acquire.

The Letter of Intent

Once a buyer and seller agree on a potential deal, they usually sign a letter of intent, or LOI. While most LOIs are mostly nonbinding, they set the stage for negotiating the final agreements. Important terms often include the purchase price, working capital adjustments, included and excluded assets, closing timelines, and possible post-closing employment or consulting arrangements. Increasingly, LOIs also cover certain indemnification terms — the rules that decide how risk is shared after closing.

Indemnification could easily warrant its own section, but from a seller’s point of view, the aim is to limit post-closing liability. Key questions include how long obligations last, the seller’s maximum financial exposure, and the threshold that must be met before a buyer can file a claim. Addressing these issues early in the LOI can help make negotiations smoother in the next phase.

Due Diligence and Documentation

After the LOI is signed, the buyer’s team begins a detailed due diligence review. The buyer will closely examine the information provided in the data room, including financial records, contracts, permits, and operational details. This is where the benefits of preparation become clear. Organized and complete documentation can answer many questions before they arise.

Understanding potential issues in advance — such as liens on assets or third-party approvals required to transfer contracts or licenses — allows the seller to manage those processes proactively rather than react under time pressure. During this stage, legal teams focus heavily on negotiating the definitive purchase agreement.

The purchase agreement allocates risk between the parties and establishes the terms necessary to close the transaction. While many provisions receive attention, one area that often receives less discussion than it deserves is the disclosure schedules. Disclosure schedules catalog the information supporting the seller’s representations in the agreement. Preparing them can be tedious, but accurate and well-organized information makes the process far smoother — and less expensive.

For many business owners, this stage can feel like the final climb of a long hike. Fatigue sets in, and the finish line is finally in sight. But the preparation completed earlier in the journey makes the ascent far more manageable.

Reaching the Finish Line

Eventually, closing day arrives. The documents are signed, the funds are transferred as confirmed, and if everything has gone according to plan, the closing call itself may only last a few minutes. Congratulations are shared, ownership officially transfers, and the next chapter begins.

Like emerging from a canyon after a long hike, you may feel exhausted — but also proud. More importantly, the journey will have been much smoother and more fulfilling because you studied the map, prepared for the terrain, and trusted experienced guides along the way.

Selling a business is rarely easy. But with proper preparation, the right advisors, and a clear understanding of the process, it can be a journey that not only reaches the goal but is also enjoyable.