Exit readiness is the part of a company sale you control completely. The market sets the multiples; your preparation decides whether you reach them. According to the DIHK Succession Report 2025, 38% of owners are poorly prepared at the point of advice because they start too late, and 36% ask an inflated price. This guide sets out seven steps you can take yourself, and the points where professional support pays off.
The market, buyer demand and valuation multiples are largely fixed. What you decide is whether your company reaches those multiples or sells below them, and that comes down to preparation. This guide is written for owners who plan to sell in the next few years and want to set the right course now, before a buyer is at the table.
Why does preparation decide the price?
Poor preparation costs negotiating power, and negotiating power is price. The pattern is clear in the data: the DIHK Succession Report 2025 finds that 38% of owners are not well prepared when they seek advice, because they start too late. Three quarters approach an external party only two years or less before the planned handover, often too late to run the sale without pressure.
The mechanism is simple. When key information first appears during the buyer's due diligence, the seller loses control. Every gap, every unresolved contract and every number you cannot evidence hands the buyer a lever to cut the price or demand warranties. Prepare cleanly, and you negotiate from strength. The wider context is set out in our guide to business succession in the German mid-market.
How much lead time do you really need?
More than most owners expect. Germany's chambers of commerce recommend starting three to ten years before the planned handover to get a company sale-ready. The sale process itself, from mandate to closing, then takes another six to twelve months. A tax-optimised holding structure needs around seven years of lead time because of statutory holding periods.
The table below places the main steps on a timeline:
| Time before the sale | Focus of preparation |
|---|---|
| 7 years | Review company and holding structure with your tax adviser |
| 3 to 5 years | Reduce owner dependence, build a second management layer |
| 12 to 36 months | Clean up the numbers, defuse concentration risk, secure contracts |
| 12 months | Mandate an M&A advisor, finalise the data room and documents |
If you do not have that runway, you are not out of options, but you give up room to manoeuvre. Even a condensed twelve to eighteen months of preparation improves the outcome over an unplanned sale. Our exit readiness check shows where your company stands today.
The seven steps to exit readiness at a glance
The sequence below works well in practice. Each step is explained in detail underneath.
- Make the company independent of you: build a second management layer and document owner knowledge.
- Get the numbers sale-ready: clean accounts and an adjusted EBITDA.
- Defuse concentration risk: reduce dependence on single customers, suppliers or key staff.
- Put contracts, legal and IP in order: clear typical deal breakers in advance.
- Prepare the data room and documentation: make it due-diligence-ready.
- Set the tax structure early: with your tax adviser, with enough lead time.
- Set a realistic value expectation: a defensible valuation instead of a gut figure.
Step 1: Make the company independent of you
Owner dependence is the single biggest value lever you control. A company that cannot run without its owner earns a lower multiple, because the buyer prices in key-person risk. If the main customer relationships, the industry know-how and the operational decisions all sit with one person, the buyer is acquiring a concentration risk.
Start early to build a second management layer and delegate responsibility. Document owner knowledge before it leaves with you. The DIHK points to exactly this problem: in smaller companies, owner knowledge is often lost at handover when no provision was made for it. The less the business depends on you, the higher the value and the smoother the eventual transfer.
Step 2: Get your numbers sale-ready
Buyers pay for earnings they can verify, not for good intentions. Make sure your bookkeeping is clean and transparent and that the last three annual accounts are in order. Separate private and business items consistently, including cars, property and insurance that do not belong to the operating business.
The key concept here is adjusted EBITDA. It shows the real earning power once owner-specific and one-off effects are removed, such as an above-market owner salary or a one-time gain. That adjusted figure is the basis for the price. Avoid aggressive tax optimisation shortly before a sale, because it lowers reported profit and later requires extensive normalisation that costs credibility. How an adjusted EBITDA becomes a value is set out in our guide to business valuation.
Step 3: Defuse concentration risk
Concentration is one of the most common price suppressors in the mid-market. If a large share of revenue depends on a single customer, supplier or key employee, the buyer discounts that risk. A company with a broad customer base and several supply sources is worth more and easier to sell.
Map where your dependencies sit and work to reduce them. Win additional customers to spread revenue. Secure critical supplier relationships across more than one source. Retain key staff on long-term terms. This work takes time, which is why it should begin early, ideally three to five years before the planned sale.
Step 4: Put contracts, legal and IP in order
Unresolved legal matters are classic deal breakers. They include missing or unclear rights to brands and intellectual property, restrictive contracts, ongoing litigation and environmental or historical liabilities. Anything that surfaces as a surprise in the buyer's due diligence costs price or ends the deal.
Review your most important contracts in advance. Pay particular attention to change-of-control clauses in customer and supplier contracts, which give a buyer a termination right when ownership changes. Secure business-critical contracts on a long-term basis, confirm ownership of brands, software and patents, and resolve open legal issues. Tax and legal questions belong with your tax adviser and lawyer; the sale process itself is the job of your M&A advisor.
Step 5: Prepare the data room and documentation
A well-prepared data room signals professionalism and speeds up the sale. Assemble the documents a buyer will want to see in due diligence: annual accounts, management reports, shareholder agreements, commercial register extracts, key customer and supplier contracts, leases and your intellectual property documentation.
Searching for these documents during live due diligence creates delay and uncertainty, and that is exactly when the selling company loses control. A vendor due diligence, meaning a structured review of your own company before the sale, surfaces weak spots early and gives you time to fix them before a buyer finds them. The DIHK notes that 70% of senior owners have not prepared an emergency file with their most important documents and powers of attorney, a simple first step any owner can take.
Step 6: Set the tax structure early
The tax burden on a company sale is decided years ahead, not at the notary. In Germany, owners aged 55 and over benefit from one-off reliefs such as the allowance under section 16(4) of the Income Tax Act and the reduced rate under section 34. A holding structure can shield most of the proceeds but needs around seven years of lead time because of statutory holding periods.
NORDVISORY does not give tax advice; that is the role of your tax adviser. What we do is build the transaction structure into the plan from the start, so the tax levers are set in time rather than once a buyer is already at the table. The mechanics and the lead time involved are set out in our guide to taxes on a business sale in Germany.
Step 7: Set a realistic value expectation
A realistic expectation is the precondition for a successful sale. The DIHK names inflated price demands as one of the most common obstacles to a successful handover. An owner who goes to market with a gut figure risks losing serious buyers early.
Value and price are not the same thing. A defensible valuation produces a value range based on the adjusted EBITDA, sector multiples and the value drivers of your company. The actual price is made later, in competition between several buyers. Our company valuation calculator gives a first orientation, and our guide to business valuation explains the method.
Do it yourself or with an M&A advisor? An honest split
You can and should handle much of this yourself, and some of it works far better with professional support. The table below shows where the line sensibly runs:
| Task | You can do this yourself | Where an M&A advisor makes the difference |
|---|---|---|
| Clean up the numbers, adjust the accounts | Yes, with your tax adviser | Framing in buyer logic, evidencing and defending the adjusted EBITDA |
| Reduce owner dependence | Yes, operationally | An objective view of what buyers treat as risk |
| Valuation | Rough orientation | A defensible value range as a negotiating anchor |
| Data room and vendor due diligence | Lay the groundwork | Due-diligence-proof preparation, fixing weak spots first |
| Finding buyers and creating competition | Limited | Curated buyer outreach and a competitive process |
| Negotiation and deal structure | Rarely | Securing price and terms through a structured process |
An advisor's biggest contribution is the competition they create. A structured process with several vetted buyers regularly produces better outcomes than a bilateral sale to the first interested party. Add to that the outside view that shows you what a buyer actually sees. NORDVISORY supports both phases: preparing your company for sale, and running the sale itself. For a sense of our work, see our advisory role in the sale of the TOP-SPORT Group, and our business sale page.
The most common mistakes in self-preparation
Three mistakes show up repeatedly. The first is starting too late. Owners who begin only once the pressure is there, through age, illness or fatigue, give away both negotiating power and tax options. The DIHK shows how widespread this is: three quarters of owners seek external support only two years or less before the handover.
The second mistake is an investment backlog. Many owners cut investment in anticipation of a sale and leave modernisation to the successor, which lowers the appeal of the business and the price. The third is emotional overpricing. Building a lifetime of work into the asking figure is human, but it leads to unrealistic demands that deter serious buyers. An external valuation guards against that trap.
Conclusion: preparation is the part you control
The market sets the multiples; your preparation decides whether you reach them. Start early, make the company independent of you, keep the numbers clean, defuse the risks, and enter the process with a realistic value expectation, and you sell from strength. The DIHK data shows this is exactly where most owners fall short, which is where the biggest lever sits. Value and price are not the same thing, and the price is made in competition.
If you want to know how exit-ready your company is today, talk to us. A first assessment is confidential and without obligation. Arrange an introductory conversation with the M&A advisors at NORDVISORY.
Frequently asked questions about preparing a business for sale
How long does it take to prepare a business for sale?
Germany's chambers of commerce recommend three to ten years of lead time to make a company sale-ready. The sale process itself then takes six to twelve months. A tax-optimised holding structure needs around seven years because of statutory holding periods. Even a condensed twelve to eighteen months of preparation noticeably improves the result.
What does exit readiness mean?
Exit readiness describes how well a company and its owner are prepared for a sale. A sale-ready company is independent of its owner, has clean and verifiable numbers, ordered contracts and due-diligence-proof documentation. Exit readiness has a significant effect on the achievable price.
What is a vendor due diligence?
A vendor due diligence is a structured review of your own company, run by the seller and often with external support, before the sale process begins. It surfaces weak spots early, so the seller can fix them before a buyer finds them in their own review. That protects your control over the process.
What can I prepare myself, and what needs an advisor?
You can clean up the numbers, reduce owner dependence, defuse concentration risk and assemble documents yourself, often with your tax adviser. An M&A advisor adds measurable value mainly in the defensible valuation, the due-diligence-ready preparation, the buyer approach and the negotiation through a competitive process.
When should I start preparing?
As early as possible. The DIHK Succession Report 2025 finds that 38% of owners are poorly prepared because they start too late, and three quarters seek external help only two years or less before the handover. Several years of lead time give you the most room on value, tax and process.
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