Transaction Readiness
Financial preparation for a sale, capital raise, or first institutional audit — historical cleanup, GAAP-compliant reporting, quality of earnings prep, and the data room a buyer will actually expect.
Why You're Here
By the time a buyer's quality of earnings firm is in your books, the math of the deal is largely fixed.
Normalized EBITDA gets measured against what you represented. Working capital targets get benchmarked against how you actually operated. Adjustments surface that you did not anticipate. Every surprise erodes value — not because the business is worse than advertised, but because it reads as less well understood.
Sell-side transaction readiness is the discipline of running that diligence against yourself first, months before a buyer does. You identify the adjustments. You document the one-time items. You reconcile the accounts. You produce the reporting in the format sophisticated buyers expect. And when diligence arrives, it confirms rather than re-discovers the story you told.
Scope of Engagement
The specific scope depends on the business and transaction type, but a typical engagement covers each of these.
Reconciling prior periods, resolving open items, rebuilding account-level documentation, producing a clean trailing three- to five-year record.
Moving cash- or tax-basis financials to accrual GAAP — revenue recognition, accruals, prepaids, percentage-of-completion, ASC 606 as applicable.
Identifying and documenting owner compensation adjustments, related-party transactions, one-time items, and pro-forma adjustments — with supporting evidence a buyer-side QofE firm will want.
Monthly build of working capital over the trailing 12–24 months, a proposed peg, and the supporting logic — one of the most heavily negotiated items in any deal.
Every material balance sheet account tied out, with workpapers that a diligence team can walk through without follow-up questions.
Concentration, churn, cohort, and segment reporting — the cuts of the business buyers ask for in the first week of diligence.
A complete, organized, properly structured data room — not a Dropbox folder named "Diligence."
Single point of contact for your investment banker, M&A counsel, diligence firms, and audit team.
Transaction Types
Readiness work applies across the spectrum of transaction events — whenever sophisticated outside parties will be looking at the financials.
Business Sales. Full sales to strategic or financial buyers, recapitalizations, and minority investments.
Capital Raises. Preparing financials, projections, and the supporting story for equity or mezzanine capital.
First Institutional Audits. Audit readiness and first-year audit support, including the workpapers audit teams expect.
Succession & ESOP Events. Family ownership transitions, gifting transactions, and ESOP feasibility baselines.
Why Senior Experience Matters Here
Transaction work is not ordinary accounting. It requires judgment calls about what to adjust, how to defend it, what the buyer will focus on, and what to raise proactively versus let them discover. Those calls are made better by people who have sat on the other side of the table.
Justin Hunt, CPA brings Big Four audit training from Ernst & Young, experience as Chief Accounting Officer of a publicly traded company, and CFO experience across multiple privately held operating companies — including direct involvement in transactions, capital raises, and audits.
Frequently Asked
Transaction readiness is the financial preparation that happens before a company goes to market for a sale, capital raise, or first institutional audit. It typically includes cleaning up historical financials, converting to GAAP where needed, building supporting schedules and reconciliations, preparing a quality of earnings package, and standing up the data room a buyer or investor will expect.
Most sellers underestimate this. The best outcomes come from starting 12 to 24 months before you plan to go to market. Twelve months gives you enough time to produce two clean trailing years. Twenty-four months lets you reshape the P&L — owner comp, one-time items, and segment reporting — in ways that materially affect valuation. Starting in the data room is too late.
A quality of earnings analysis is the buyer-side review that normalizes reported EBITDA — adjusting for one-time items, owner compensation, related-party transactions, revenue recognition policy, and accruals — to arrive at a defensible run-rate earnings figure. Sell-side QofE prep is the mirror-image work: identifying and documenting those adjustments in advance so the buyer's diligence firm does not surface them as surprises.
Not always. Many lower-middle-market transactions close on reviewed or compiled financials plus a buyer-side quality of earnings. Audited financials become more important at larger deal sizes, with institutional buyers, or when the owner is rolling equity into a continuing entity. The right answer depends on likely buyer profile and deal size — something worth deciding early.
A buyer data room typically includes three to five years of financial statements, monthly trial balances, supporting schedules for every material balance sheet account, customer and vendor concentration analyses, revenue by segment or product, payroll and benefits detail, tax returns, debt and lease agreements, material contracts, org charts, and insurance summaries. The completeness and organization of the data room directly affects how diligence goes.
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Whether the event is 6 months or 24 months out, the readiness conversation is worth having early. 30 minutes, no pitch, direct answers.
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