12 Months Before Selling: How to Prepare Your Company to Be Worth More

There's a phrase we repeat often at Capittal: "The best sale transaction is won in the preparation, not in the negotiation."

And it's not just a slogan. It's what we see transaction after transaction. Companies that dedicate time to preparing before going to market achieve better prices, faster processes and fewer problems in due diligence. Those that go to market unprepared encounter surprises, last-minute price reductions and processes that drag on indefinitely.

If you're thinking of selling your company in the next one or two years, this article is your roadmap. Month by month, the actions that have the greatest impact on the final value of the transaction.

Months 12-10: The Internal X-Ray

The first step is to look at yourself in the mirror honestly. Not as the proud entrepreneur you are—which is how you should look at your company every day—but as a cold and analytical buyer would.

Start with the accounts. Are they clean? Do they reflect the reality of the business? In many Spanish SMEs, the accounts have "noise": personal expenses mixed with company expenses, family members on payroll who don't have a real role, undervalued profits due to aggressive tax strategies. All of this, which may make fiscal sense day-to-day, is a problem when you're going to sell.

A buyer looks at your accounts and needs to see a real, clean and credible EBITDA. If your real profits are higher than what your accounts reflect (what we call "normalisation adjustments"), you need to document and justify each adjustment impeccably. The fewer adjustments that need explaining, the more confidence it generates in the buyer and the fewer discounts they apply.

In this phase, also review your contracts with customers and suppliers. Are they formalised in writing? Do they have sufficient validity? Are there change of control clauses that allow the customer to terminate if the company changes ownership? These types of details, which seem irrelevant day-to-day, can cost hundreds of thousands of euros in a negotiation.

Months 9-7: Reduce Dependencies

Buyers fear dependencies. Dependence on a customer that weighs too heavily, dependence on an irreplaceable supplier, dependence on a key person—including you.

Diversifying the customer portfolio in nine months is difficult, but you can take measures: strengthen commercial relationships with medium-sized customers that have growth potential, open new business lines or new geographical markets, even if incipient.

Regarding dependence on the founder, this is the time to start truly delegating. Not in words, but in practice. If you're the one who approves every order, who visits every important customer and who resolves every incident, the buyer sees enormous risk: what happens when you leave?

Building a solid second management level—or at least demonstrating that operations can function without you for a few weeks—is one of the investments with the highest return for the sale.

Months 6-4: Document, Document, Document

Due diligence is the moment when a buyer puts your company under the microscope. They're going to ask for hundreds of documents: contracts, audited accounts, tax returns, employment records, licences, permits, insurance, business plans.

Having all this documentation organised, updated and accessible not only accelerates the due diligence process (which can last between two and four months), but also conveys an image of professionalism that the buyer values enormously. The opposite—searching for papers in drawers while the buyer waits—generates distrust and can cause the transaction to fall through.

Create a virtual data room with all relevant documentation, organised by categories: financial, tax, legal, employment, commercial, operational. You don't need sophisticated software; a well-organised cloud folder is sufficient. The important thing is that when the moment arrives, everything is ready.

In this phase, it's also a good time to resolve any pending contingencies: open litigation, unclosed tax inspections, permits in process. Everything you can resolve before the sale will avoid discounts or complications during negotiation.

Months 3-1: Fine-Tune the Story

The last months before going to market are for fine-tuning the narrative. It's not about inventing anything, but about presenting your company in the most attractive and honest way possible.

What is your differential value proposition? Why is your company difficult to replicate? What is the real growth potential over three to five years? What would a buyer with more resources do that you haven't been able to do?

A good Information Memorandum answers these questions clearly and convincingly. It's not an advertising brochure. It's a serious document that presents the facts and potential in a way that the buyer quickly understands why your company is a good investment.

At Capittal, we dedicate considerable effort to this phase because we know that the first impression the buyer has of your company is through this document. And there's no second chance for a first impression.

What You Shouldn't Do in the 12 Months Prior

As important as what you should do is what you shouldn't do. These are the mistakes we see most in the phase prior to sale.

Don't make important investment decisions without consulting. Expanding the warehouse, buying new machinery or opening a new business line may be a good idea operationally, but can complicate the valuation and sale process. Any relevant investment must align with the sale strategy.

Don't change tax or accounting advisers. Continuity in financial information is crucial. A change in accounting criteria just before the sale raises unnecessary suspicions.

Don't neglect the business. It seems obvious, but it happens. Some entrepreneurs, once they decide to sell, mentally disconnect and the business suffers. Buyers scrutinise the "current trading" (how sales and margins are performing at present). If numbers drop just before the sale, the buyer will ask for a reduction.

And don't try to do it alone. Preparing a company for sale requires specific experience that goes beyond daily business management. An M&A adviser guides you through each step, tells you where the risks and opportunities are, and saves you from making mistakes that can cost a lot of money.

12 Months Worth Millions

The difference between a prepared company and one that isn't can be 20-30% in the final price. It's not an exaggeration: it's what we observe in practice. Buyers pay more for companies where they see order, transparency, continuity and documented potential.

12 months is sufficient time to do this work. It doesn't require large investments or radical changes. It requires method, honesty and good advice.

Are you thinking of selling in the next 12-24 months? It's the perfect time to start preparing. At Capittal we accompany you from day one. Contact us for an initial and confidential evaluation.