For most of 2021 through early 2024, sellers of privately held businesses operated in one of the most favorable markets in a generation. Strategic buyers were flush with capital. Private equity firms were under pressure to deploy. Multiples expanded. Deals closed fast.
That environment is different now.
Interest rates changed the math on leveraged buyouts. Buyers are more selective. Diligence timelines are longer. And the deals that are falling apart aren't falling apart because the businesses are bad. They're falling apart because the sellers weren't prepared.
What's actually driving deals today
The fundamentals of a good business still matter: consistent revenue, healthy margins, a defensible market position. But the bar for "prepared" has gone up significantly.
Three years ago, a buyer might accept a company with six months of clean books and a verbal explanation for everything else. Today, that same buyer wants 36 months of auditable financials, a clear story around customer concentration, and confidence that the revenue you're showing them will still be there in 18 months.
The businesses getting deals done, and getting good ones, are the ones whose finance function was already operating like a public company. Clean monthly closes. Board-quality reporting. Defensible EBITDA adjustments with clear documentation.
The premium is going to businesses that walked in prepared. Not businesses that scrambled to prepare after they hired a banker.
The thing that kills deals most often
We've sat at the table for hundreds of transactions. The number one deal killer isn't valuation disagreement. It isn't the market. It isn't even a bad business.
It's financials that can't survive scrutiny.
When a quality of earnings report surfaces a revenue recognition issue, or when a buyer's accountant finds three years of inconsistent expense categorization, the deal doesn't just get repriced. It gets derailed. The seller loses months of time, the momentum, and often the buyer entirely.
The worst part: every one of those issues was fixable. They just weren't fixed before the process started.
What "ready to sell" actually means
We tell clients that being ready to sell doesn't mean you're ready to sign an LOI. It means your business can withstand the scrutiny that comes after one.
In practice, that means:
- 36 months of clean, consistent financials prepared on an accrual basis with no gaps or restatements
- Clear separation of owner economics from business operating expenses, documented and defensible
- A revenue story that holds up — not just a number, but the contracts, the cohorts, the retention data behind it
- An organized data room that doesn't require six weeks of scrambling to assemble under deadline
- A CFO-level narrative that frames your financials for a buyer, not just reports them
Most businesses aren't there. Most businesses can get there — but it takes 12 to 18 months of deliberate work, not a 90-day sprint after you've already engaged a banker.
A note on timing: The best time to start preparing your business for a sale is when you have no current plans to sell. The work you do now — cleaning the books, tightening controls, building board-quality reporting — makes the business more valuable whether you sell in two years or ten.
The bottom line
The market is still producing exits. Multiples haven't collapsed. Good businesses with clean financials and a clear story are still finding buyers at strong valuations.
But the days of "good enough" are over. Buyers have more options, more time, and more diligence capacity than they did three years ago. They will find the problems. The question is whether they find them before or after they sign.
If a sale is in your three-year horizon, the work starts now. We can help you understand exactly where your financials stand and what it would take to make them deal-ready.