How to prepare your business for sale (without leaving 20–30% on the table)

I recently shared a video for business owners who are thinking about selling.

In it, I explained that most business owners leave 20–30% of value on the table when they sell and shared key steps to help ensure that doesn’t happen to you.

We’ve distilled the video’s key points below:

1. Start preparing early

• Most business owners lose 20–30% of value in a sale due to poor preparation.

• On a $5 million business, that’s $1–1.5 million lost.

• Preparation should begin when you start the business – but the next best time is today.

2. Get an independent business valuation

Before doing anything else:

• Obtain a fair market valuation from someone experienced in valuing and transacting in your industry/sector, and who is an independent party (i.e. they’re not providing you with other services, so no conflict of interest).

• This valuation should reflect:

  • Financial performance

  • Client base and supplier strength

  • Business structure

  • Market position and differentiation

  • External market pressures

  • Comparable business sales.

Reality check:

• ~30% of valuations pleasantly surprise owners

• ~70% underwhelm them.

This gap highlights what must be improved before going to market.

3. Identify and fix value risks

A valuation often reveals three common issues:

i. Owner dependency risk

• If the business relies heavily on you, buyers see risk.

• Solution:

  • Hire or promote a key manager

  • Delegate decision-making authority

  • Create clear accountability structures

  • Reduce reliance on the owner for daily operations.

ii. Revenue concentration risk

• If 1–2 customers make up 50%+ of revenue, buyers will discount the business.

• Solution:

  • Diversify your customer base (i.e. ensure no single customer represents more than 10% of your revenue)

  • Secure longer-term contracts where possible.

iii. Competitive/margin pressure

• Highly competitive markets reduce perceived value.

• Solution:

  • Strengthen your differentiation

  • Improve margins

  • Clarify your strategic position.

4. Create a value-building plan

Depending on your situation, you may need:

• a 2 to 5-year improvement plan

• a 6-month to 2-year optimisation push

• immediate readiness if already well-prepared.

This also determines your sale strategy:

• Open market process (broad buyer pool)

• Targeted strategic sale (may generate a premium).

Strategic buyers may pay above fair market value if your business offers competitive advantage.

5. Strengthen key financial metrics

Buyers compare your business to industry standards.

Track and improve:

• Revenue growth (3-year trend)

• Gross profit margins

• Industry comparisons

• Performance consistency.

You want:

• Clear and stable performance that also shows growth, ideally in revenue, and/or improved scale in earnings (i.e. greater % of revenue generated at the bottom line, after overheads).

• Logical explanations for performance, where there is volatility.

• Metrics that look attractive at first glance, and provide a decent return for the risk/investment.

6. Upgrade reporting and financial transparency

Some of the biggest deal killers:

• A lack of evidence-based and factor-based information on the business and its overall performance

• Inconsistent and inaccurate financial information

• Delayed responses to buyer questions

• Multiple sets of numbers that don’t align.

Buyers want:

• Accurate, timely reporting

• Clean accounts

• Transparent performance data.

If your reporting is messy, fix it before going to market.

7. Optimise your tax position

The headline sale price isn’t what matters.

What matters: What ends up in your pocket after tax.

Before selling:

• Speak with your accountant.

• Consider whether to sell:

  • Shares in the company

  • Business assets.

• Understand tax implications in advance.

Tax planning done early can significantly improve net proceeds.

8. Prepare sale documentation and advisors

You’ll need:

• A professional Information Memorandum (IM)

• Clear positioning of the business

• Advice on likely buyer appetite.

Potential buyers may include:

• Competitors

• Complementary businesses

• Strategic acquirers

• Investors

• First-time buyers.

9. Avoid going to market ‘undercooked’

Common mistake:

• Deciding to sell and rushing to market.

Risks of poor preparation:

• 20–30% lower price

• 12–24 month sale process instead of 6 months

• Deal collapse

• Emotional and financial drain.

Final takeaway

Preparation requires:

• Patience

• Discipline

• Diligence.

Preparation directly translates into more money in your pocket and a higher probability of a successful sale.

If you’re thinking about selling, don’t just go to market. Prepare first.

The JPAbusiness team can help with all aspects of selling your business. Get in touch to learn more about our valuation and transaction services.