How to Make Your Business Bankable Before You Sell It | Dan Pascone with Jeff Glick | Ep #53

Jeff Glick spent his career on the finance side: two years in public accounting to get his CPA, then Merrill Lynch, Salomon Brothers, a stint buying energy assets around the world, and eventually CFO of a $500 million company he helped grow to $2 billion. Today he runs U.S. operations for OCFO, a firm that's handled roughly 1,400 fractional CFO and accounting engagements across 35 countries.

His definition of bankable is specific: your accounting and financial records need to be timely, accurate, and consistent, you need to be tracking key metrics and benchmarks, and your reporting needs to be strategic enough to actually help you run the business, not just file taxes.

Here's where it gets concrete. If a buyer asks for three years of quarterly reporting during due diligence and you can't produce it, or you can't explain your margins, that gap gets priced as operational risk. Jeff's example: you think your business is worth 10 times EBITDA, but the buyer offers six times instead, or they'll pay the 10x, just stretched across a five-year payout because they're not confident in what they're buying.

Once your business is genuinely bankable, structuring that eventual sale for tax efficiency is its own separate project. Our piece on turning valuation into legacy picks up where this episode leaves off.

Jeff calls this building value from the inside, and margin visibility is his go-to example. Ask an owner their margin and they'll often say something like 50% on average. Ask how many jobs run at 75% versus 25%, and most can't answer. That gap is where profit and risk both hide: maybe pricing is off on the low-margin work, maybe one team or one salesperson is dragging the average down, or maybe there's no system tracking labor and materials at all.

The fix starts with policies, procedures, and internal controls: tightening reporting so you can see margin by project, product, or team, not just in aggregate.

Jeff frames this as an investment decision, not a cost center. His rule of thumb: if a reporting or operational gap is costing you a discount on your valuation multiple, and cleaning it up costs a fraction of that, the return can be dramatic. In one example he uses, a business generating real free cash flow could be facing a multi-million-dollar valuation discount over operational risk that a few hundred thousand dollars of financial infrastructure work could largely eliminate, a return that can run 30x or more on the investment.

As Jeff puts it, that's a return you should chase every day of the week.

Jeff's guidance on timing is direct: start at least one year, ideally two, before any material transaction. Due diligence typically asks for one to two years of financial statements and tax returns, and if the bottom-line number on your tax return doesn't reconcile with your financial statements (which happens often, since a tax preparer may be making adjustments the accounting side never sees), you need a clean bridge between the two before a buyer asks the question for you.

Jeff sees every version of this. Some businesses have a CFO whose hands are tied by budget, and a fractional team can extend what that person can do at a lower cost. Others have a bookkeeper or controller who's been there for 20 years, does a fine job, but only tracks cash, receivables, and payables, essentially just watching whether payroll gets made. That's a perfectly viable way to run a lifestyle business you intend to keep in the family. It's not enough if you want the option to sell at the next level, and that's the moment to figure out whether to build internal capability or bring in outside help.

Jeff's read on current M&A activity: buyers increasingly use technology and algorithms to move faster through diligence rather than rolling up their sleeves on-site the way they used to. They're checking whether expenses track consistently as a percentage of sales, whether insurance coverage is adequate, and whether salaries are in line with market rates. The tools have changed, but the underlying question hasn't: is this business's risk understood, or is it a surprise waiting to be found?

The piece most owners miss is timing their own realization. Jeff describes the moment an owner learns they don't have a materials tracking system, or can't explain their margin spread, and just stares back at him asking how to fix it. By the time a deal is actually on the table, that's the worst possible moment to discover the gap. Bankability isn't a sprint you run once you've decided to sell. It's infrastructure you build regardless, because it gives you options you don't have to use immediately, whether that's a sale, a merger, or simply running a more profitable business in the meantime.

Jeff also shared how the 2007 and 2008 financial crisis hit his own family. He'd been saving for his sons' college educations, and when the market dropped, those savings lost 30 to 40%, with one son starting college in 2010 and another in 2012. He and his wife moved that money to cash to protect it, since there wasn't time to wait for a recovery before the tuition bills arrived.

That instinct, protect the money you need soon differently than the money you don't need for a decade or more, is the core idea behind what we call Life Driven Investing: separating your capital by time horizon and purpose so a market drop doesn't put your near-term goals at risk just because your long-term capital is temporarily down. It's the same sequence-of-returns risk that matters whether you're funding college in two years or your own retirement. Our Life Driven Investing framework walks through how we build that separation for clients.

This episode is for business owners who want the option to sell, merge, or bring in a partner someday, even if that day is years away, along with high earners who want the same discipline applied to their own financial life. If your business's numbers would make you nervous in front of a buyer's due diligence team, or if your college savings and retirement savings are invested exactly the same way, this one's worth the listen.

Whether it's a business you might sell someday or a personal financial plan that needs to hold up under scrutiny, the same principle applies: build the structure before you need it. A Free Wealth Strategy Call with Tailored Wealth is a low-pressure way to see where the gaps are. You can also learn more about Jeff Glick's work at ocfo.com.