Score Each Area

Select the statement that best describes your current state.

1. Statement Quality and History

Tax-basis books only; producing three clean years would take months.

Statements exist but need cleanup, restatement, or explanation before showing a buyer.

Reviewed or audit-ready financials, three years producible on request.

2. Customer Concentration

A single customer is 25%+ of revenue.

The top customer is 15 to 25%, or the top three exceed half.

No customer above roughly 15%, with revenue spread across durable relationships.

3. Revenue Character in the Books

Recurring and one-time revenue live in one line; nobody can split them.

The split can be built manually, with effort, each time it is asked for.

Recurring and project revenue separated in the chart of accounts, with a 24-month trend visible.

4. Normalization and Add-Backs

Owner expenses run through the P&L untagged; adjusted EBITDA is a future argument.

Add-backs are known informally; documentation would be reconstructed under pressure.

An add-back schedule is maintained now, documented, and defensible in a quality of earnings review.

5. Chart of Accounts

Built for the tax return; a buyer cannot see the business in it.

Functional but muddy: mixed categories, inconsistent history.

Restructured around how a buyer evaluates the business, applied consistently.

6. Accrual Discipline and Cutoffs

Cash basis, or accrual in name only; reconciliations lag.

Accrual with known cutoff issues and periodic catch-up entries.

Clean accrual accounting, monthly reconciliations, no cutoff surprises.

7. KPI Reporting

No standing KPI package; metrics get assembled on request.

Some dashboards exist, but not the metrics a diligence team asks for.

Monthly reporting on buyer-relevant KPIs: recurring mix, retention, margin by line, concentration.

8. Contract and Retention Strength

Handshake renewals; churn or repeat rates unmeasured.

Contracts exist; terms are short or retention is not quantified.

Multi-year or auto-renewing agreements and measured retention a buyer can verify.

N/A: Purely transactional model

9. Management Depth

Every material decision and key relationship runs through the founder.

A second layer exists, but the founder is still the system.

The business runs 30 days without the founder, and a buyer can see it.

10. Valuation Awareness

No idea of the likely multiple or what drives it in your sector.

A ballpark from conversations, without knowing which levers move it.

You know the multiple range, the two or three levers that move it, and you are operating them.

Exit Readiness Scorecard