Preparing a Business for Sale 

Preparing a business for sale is rarely something owners get right on the first attempt, mostly because they leave it until a buyer is already asking questions. FD Recruit’s January virtual boardroom brought in Darren Hodson, head of corporate finance at PKF, to walk through the exit matrix he uses with clients and the gaps that catch vendors out time and again.  

Darren Hodson has spent over 25 years advising on disposals, including deals worth up to a billion pounds and PKF alone completed 180 UK deals worth £5.6 billion last year. 

“You don’t know what you don’t know and a lot of people approach us when it’s already too late.” 

Why Preparing a Business for Sale Needs an Advisory Team Early 

Darren’s first message was blunt. Owners who assemble a lead adviser, a corporate lawyer, a tax adviser and a wealth manager before starting a process put themselves on a far stronger footing than those who wait. The wealth manager point often gets overlooked, yet moving from owning a business to owning cash is a bigger shift than most vendors expect and mapping out retirement needs early helps decide whether a valuation actually meets the target. 

Common Mistakes Vendors Make When Preparing a Business for Sale 

Darren Hodson said the same gaps come up with almost every client: 

• Not understanding value drivers: Most owners have never had anyone set out what makes their business valuable and the answer is usually more positive than they assume 

• Weak operational performance: Businesses built on fragility rather than sound processes rarely attract strong offers 

• Ignoring exit options: Many vendors assume a 100% trade sale is the only route, overlooking management buyouts or a partial cash out 

• Ignoring management succession: Buyers rarely have spare people to run a business themselves, so a capable team already in place removes a major risk 

• Skipping self-due diligence: Asking a lawyer for the standard due diligence questionnaire early lets owners fix gaps before a buyer ever sees them 

On exit routes specifically, Hodson pushed back on a common misconception. 

“A management buyout is possible even when management has no funds of its own, because there is a whole raft of debt and private equity instruments available to fund a deal today.” 

What Actually Moves the Multiple 

Beyond the basics, Darren pointed to scalability as the strongest lever on price. A business that is easy for a new owner to expand, rather than one that already has scaled, tends to command a noticeably higher multiple. Critical mass matters too, since a small turnover figure rarely interests a large acquirer regardless of profitability. Recurring revenue locked into contracts reduces buyer risk and lifts value, while running a genuinely competitive process, rather than accepting the first offer, remains one of the simplest ways to push up the final price. 

Timing Still Comes Down to the Sector 

Darren closed with a reminder that market timing sits alongside personal timing. Sectors move in cycles and a business that looks attractive today might face a cooler market in two years. Getting the exit matrix right means balancing what the owner wants personally against where the sector currently sits. 

In Summary 

Preparing a business for sale is a multi-year process built on the right advisory team, a clear understanding of value drivers and a realistic view of exit options. Vendors who address these gaps early consistently achieve stronger outcomes than those who wait until a buyer comes knocking.