FAQ
What does it mean for a business to be “bankable”?
A bankable business has financial infrastructure that a lender or buyer can trust: timely and accurate accounting, consistent reporting, tracked key metrics, and clean documentation. Practically, it means your business can survive diligence without confusion, delays, or credibility gaps that create perceived risk.
How do clean financials protect valuation before a sale?
Because risk gets priced into deal terms. If you can’t produce credible reporting or explain margins, buyers may lower the multiple, add earn-outs, or require longer payouts to compensate for operational uncertainty. Clean financials reduce uncertainty and help your numbers tell a confident story.
What’s the fastest “inside” improvement that increases bankability?
Margin visibility. Many owners know average margin but don’t know which products, projects, or clients are highly profitable vs. low profit or loss. When you can identify the 75% margins and the 25% margins, and explain why, you can fix pricing, execution, and staffing decisions in a way that improves cash flow and reduces risk.
How far in advance should a business owner start preparing for a sale or major transaction?
Jeff recommends at least 12 months, and often 24 months, because diligence typically requests one to two years of financial statements and tax returns. That runway also gives you time to build a clean bridge between tax and book reporting and improve processes without disrupting operations.
What’s the difference between “a lifestyle business” and a business built for exit options?
A lifestyle business can be perfectly valid, but it’s often built around the owner’s presence and informal reporting. A business built for exit options invests in systems, controls, and reporting so performance can be understood and repeated without the owner doing everything. That repeatability is what creates transferable value.
How should business owners think about investing when they have near-term obligations like college?
Dan highlights a “bucket” approach: money needed in the near term (like college within a few years) is typically managed differently than long-term retirement capital. The key risk is sequence of returns, if you need the money soon, a market drawdown can hurt more because you don’t have time to wait for a recovery. Your strategy should match your timeline and goals.