The decisions you make before going to market have a direct impact on the price you achieve. A well-prepared business attracts more buyers, creates stronger competition, and gives buyers confidence to offer at or above asking price. This guide covers what to get in order, what drives value, and what is worth addressing before you go to market.

Start earlier than you think you need to

The most common mistake vendors make is leaving preparation too late. Many owners only start thinking seriously about a sale when they have already decided they want out, which means they go to market in whatever condition the business happens to be in at that moment.

The businesses that sell best are the ones whose owners started thinking about the eventual sale one to three years before they were ready to list. Not because there is a huge amount to do, but because some of the most valuable improvements (consistent growth, cleaner financials, reduced key person dependency) take time to show up in the numbers.

Getting a free appraisal well before you plan to sell gives you a clear picture of where the business sits today and what, if anything, would meaningfully improve the outcome. Many vendors are pleasantly surprised. Others identify two or three changes that are worth making before going to market.

Understanding how buyers assess value is also useful groundwork before you start preparing. Buyers weigh up risk, reward, and effort, and the decisions you make now will directly affect how your business scores on each. The how businesses are valued guide covers this in detail.

Worth knowing: Buyers assess a business on risk, reward, and effort. A business that is growing, well-organised, and not dependent on the owner will always attract stronger offers than an equivalent business that is flat, disorganised, or owner-dependent, even if the underlying numbers are similar.

Get your financials in order

Your financials are the foundation of every conversation with a buyer. Everything else in the sale process sits on top of them. If the financials are messy, incomplete, or hard to follow, buyers get nervous, and nervous buyers either walk away or offer less.

What buyers and their accountants want to see

  • Profit and loss statements for at least the last three years, prepared by an accountant
  • A current year-to-date profit and loss statement
  • Balance sheets for the same period
  • Tax returns confirming the figures
  • GST returns if the buyer's accountant requests them

What to look at before going to market

Owner's drawings and add-backs. Many small business owners run personal expenses through the business. This is common and there is nothing wrong with it, but it needs to be clearly identified and documented before going to market. These are called add-backs: expenses that were real costs to the current owner but would not be costs for a new owner. Add-backs are a key part of calculating SDE (Seller's Discretionary Earnings), also known as EBIPTDA, which is the earnings figure buyers and brokers use to assess value. Your accountant can help present these clearly. The valuation guide covers SDE and EBIPTDA in more detail.

Revenue concentration. If a large proportion of your revenue comes from one or two clients, buyers will worry about what happens if those relationships do not transfer. If this is the case in your business, it is worth either diversifying before selling or being prepared to address it directly with buyers and price accordingly.

Trending in the right direction. A business with three years of growing revenue and profit will always be more attractive than one that peaked two years ago and has been declining since. If your numbers have been declining, it is worth understanding why before going to market, and ideally addressing it.

Clean up anything unusual. Large year-on-year changes in expenses, one-off costs, and non-recurring income all need clear explanations. If a buyer's accountant sees revenue or expenses that shift significantly from one year to the next with no obvious reason, it raises questions. Identify anything non-recurring (a one-off contract, an unusually large repair, a redundancy payment) and be ready to explain it clearly. The more self-explanatory your financials are, the less time buyers spend worrying about what they do not understand.

What buyers actually pay for

One of the most common conversations in a sale preparation is a vendor explaining the untapped potential in their business. If the new owner just did this, or invested in that, or expanded into this market, they could make significantly more money.

This is understandable. You have built the business and you can see the opportunities. But a buyer will not pay you for potential they have to create themselves.

Think about it from the buyer's perspective. They are being asked to pay a significant sum based on what the business earns now. You are then telling them that if they do things differently, it could earn more. Their natural response is: if it is that straightforward, why have you not done it? And they are right to ask.

If there are genuine, actionable improvements you can see, the most valuable thing you can do before selling is implement them yourself and let the results show up in the numbers. A business generating $400,000 in profit is worth considerably more than a business generating $300,000 in profit with a story about how it could be $400,000.

That is not to say growth opportunities have no place in a sale. They do. A well-considered plan showing a realistic path to growth, with the logic and numbers to support it, adds genuine value to a buyer's thinking. The difference is between a vague claim and a credible roadmap. Buyers will engage with the latter. They will discount the former.

Revenue is not the same as profit. Many vendors focus on growing revenue in the lead-up to a sale, sometimes taking on significant costs to do so. But revenue growth that does not improve the profit margin will not improve the sale price. Buyers and lenders value sustainable profit, not turnover. If you are going to invest in growth before going to market, make sure it flows through to the bottom line.

Get your documentation together

Buyers, their accountants, and their lawyers will ask for a range of documents during due diligence. Having these organised and ready to go speeds up the process significantly, reduces the stress on you, and signals to the buyer that the business is well-run.

1

Contracts and agreements

Gather all material contracts: leases, supplier agreements, major client contracts, franchise or distribution agreements, equipment leases, and any exclusive arrangements. Check the terms around assignment or change of ownership clauses, as some contracts require the other party's consent to transfer.

Pay particular attention to your lease. Check that it contains a proper assignment clause allowing the lease to be transferred to an incoming buyer, and consider what the remaining term looks like from a buyer's perspective. In most cases landlords are straightforward to deal with, but occasionally a landlord will be difficult, refuse consent, or seek to significantly change the terms when a new tenant is proposed. Finding this out before going to market rather than during due diligence can save a sale from falling over. If there is any uncertainty, it may be worth having an early, informal conversation with your landlord before you list.

2

Employment records

Have current employment agreements in place for all staff. Buyers want to know what they are taking on in terms of staff costs, entitlements, and obligations. Outdated, verbal, or missing employment agreements raise concerns. Your HR advisor or lawyer can help bring these up to date if needed.

3

Intellectual property

Identify what intellectual property the business owns: trademarks, website, domain name, brand assets, proprietary processes, and any software or systems developed for the business. Ensure these are held by the business entity rather than personally by the owner, and that any registrations are current.

4

Asset register

A clear, up-to-date list of all assets included in the sale: plant, equipment, vehicles, stock, and any other items. Note the condition of each, whether it is owned outright or under finance, and include any relevant maintenance or service records. Assets with finance over them need to be discharged before or at settlement.

5

Licences and registrations

Ensure all business licences, industry registrations, and compliance certificates are current. Expired licences or compliance issues discovered during due diligence can hold up or kill a sale. If any licences are personal to the current owner rather than attached to the business, consider how this will be managed in the transition.

Reduce key person dependency

One of the most common and most avoidable things that reduce the value of a small business is the owner being too central to its day-to-day operation. If the business cannot function without you, buyers will either discount the price to reflect the risk, require a long handover period, or simply walk away.

You do not need to remove yourself entirely from the business before selling. But the more the business can operate without you, the more confident buyers will be in its continued performance after you leave.

Practical things you can do

  • Document key processes so they can be followed by someone without your institutional knowledge
  • Ensure key client and supplier relationships are known to and managed by at least one other person in the business
  • Delegate decision-making where possible so the business does not grind to a halt when you are unavailable
  • If there is a key staff member who carries significant operational knowledge, consider how to retain them through the sale process

Tidy up the physical and digital presence

First impressions matter. A buyer who walks through a well-maintained, organised premises with clean systems and a professional online presence will feel more confident than one who walks into chaos, even if the underlying financials are identical.

This does not mean spending money on a renovation. It means presenting what you have in its best light. A tidy workshop, an organised office, up-to-date Google reviews, a functioning website, and clean social media accounts all contribute to the overall impression a buyer forms.

Similarly, if there are obvious deferred maintenance issues: vehicles overdue for a WOF, equipment that needs servicing, a fitout that is visibly tired. It is worth addressing these before going to market rather than having them raised during due diligence as negotiating points.

Plan for confidentiality

Deciding to sell your business is not something you want becoming public knowledge before you are ready. Staff who find out informally tend to worry about their jobs. Clients who hear through the grapevine may start looking elsewhere. Competitors who find out may try to poach your people or clients.

A well-managed sale process keeps the circle of knowledge as small as possible for as long as possible. Advertising is written to describe the business without identifying it. All buyers sign a confidentiality agreement before receiving any information. Staff are not told until the agreement is unconditional.

The most common source of confidentiality leaks is the vendor themselves. Well-meaning conversations with trusted friends, family, or other business owners. Keep it quiet. The time for transparency is once the sale is unconditional and managed carefully from there.

Be honest about the business

A thorough buyer and their advisors will find most things during due diligence. Problems that surface after you have signed a sale and purchase agreement are far more disruptive, and potentially costly, than problems that are disclosed and priced in from the start.

Being upfront about known issues (a difficult client, an ageing piece of equipment, a lease that is due for renewal, a revenue dip you can explain) builds trust with buyers and tends to result in a smoother process. Buyers who feel they have been given an honest picture are more comfortable committing. Buyers who feel surprised or misled are more likely to pull out or renegotiate.

Your broker is there to help you present the business honestly and in its best light. Those two things are not in conflict.

Common questions about preparing for sale

For a well-run business with clean financials, preparation before going to market typically takes one to four weeks. For businesses that need work, some owners choose to spend six to twelve months making improvements before listing. The right timeframe depends on the current state of your financials, whether there are obvious improvements worth making, and how urgently you need to sell.
No. Staff are typically not told until the sale and purchase agreement is unconditional. Before that point, confidentiality is maintained through carefully worded advertising and confidentiality agreements signed by all prospective buyers. Once unconditional, the timing and approach to telling staff is managed carefully with your input.
It depends on the nature and cost of the problem. Minor issues that are inexpensive to fix and would concern a buyer are generally worth addressing. Major structural issues are usually better disclosed and reflected in the price, as buyers will find them during due diligence anyway. Trying to conceal a known problem is both risky and counterproductive. It tends to create bigger problems later in the process.
The best time to sell is when the business is performing well, the financials are clean and ideally trending upward, and you are not selling under pressure. Businesses sold from a position of strength consistently achieve better outcomes. An early appraisal, even if you are not ready to sell for another year or two. It gives you a clear picture of where you stand and what is worth focusing on.
Buyers and their accountants will want to see at least three years of financial accounts. The P&L statements should come first as they show the trading performance, followed by balance sheets and tax returns to confirm the figures. A current year-to-date profit and loss statement is also important, particularly if the business has been growing. Your accountant can help ensure these are in order and that anything unusual (large year-on-year expense changes, one-off costs, or non-recurring income) is clearly identified and explained.

If you are thinking about selling in the next one to three years, a free appraisal conversation is the most useful first step. It gives you a realistic picture of what the business would sell for today and what, if anything, is worth addressing before going to market. No obligation, no cost, and everything is confidential.