Want to Sell Your Business? Here’s What Private Equity Firms Actually Look For
Welcome back to another session of Visibility CFO, Tax and LEGAL. I’m Andrew Stubbs, Director of CFO Services and Tax Planning Group. Remember, in these episodes we try to unpack some of the real challenges our clients face—and share creative, actionable solutions that turn confusion into clarity.
Today’s topic we want to touch on is what the pool of potential buyers of your business, when we boil it down, are looking for. Now, if you’ve thought about selling your business–or are even just wanting to keep your options open, we want to help business owners, such as yourselves, reverse-engineer what private equity (PE) firms are evaluating so you can begin preparing now—before you may be even ready to sell. The goal is to position yourselves as a premium, investable company, not just a profitable one.
Even if you don’t want to sell to a PE firm, working toward that standard today will make your business more profitable now or for whatever exit you are seeking, so it is definitely worth your while.
At a high level the 4 things you should nail are: 1. The right kind of revenue, 2. Clean and readily-available financials that are due-diligenceable 3. A Strong team beyond the founder, and 4. The right legal & tax structure.
First, high revenue doesn’t automatically mean high valuation.
Most business owners assume that more sales = higher value. And while revenue matters, PE firms are often more interested in how reliable and scalable your income is. Are your customers diversified? Do you have recurring revenue that is contractual and not just month to month without a commitment? Is your growth sustainable given your management team?"
Second, a buyer’s trust starts with your numbers.
If your books are messy, your value drops—period. PE firms want to see clean, verifiable financials, solid internal controls, and systems that don’t rely solely on you. This is why clean, accurate financials are SO critical. Processes and SOPs documenting how key business functions run so they can scale or delegate are also really important.
And there are bonus points if you're already using dashboards and KPIs to track performance to help show progress over the years.
Think of it like staging a house for sale—you want buyers to walk in and see everything clean, organized, and ready to live in.55
Third, PE firms are looking for a strong team, not Just a strong founder.
PE buyers don’t want to buy your job—they want to buy a business that runs with or without you. Are your operations and leadership team strong enough to keep driving value after you step back?
Ask yourself: “If I took a 3-month vacation, would the business survive—or stall?”
A seasoned management team with defined roles increases your multiple.
Cross-training and documented processes reduce key-person risk.
Demonstrating that the business can thrive without you makes it more valuable—and more sellable.
Tip: Start transitioning yourself out of day-to-day operations 1–2 years before a sale. Let buyers see that your team already runs the business.
Fourth, Legal and Tax Structure Matters
Overlooked legal risks can tank your deal—or at the very least, diminish value
PE firms want to avoid surprises. Before they buy, they’ll ask:
Are contracts assignable?
Are all vendors, employees, and IP properly documented?
Do you own your trademarks, domain names, and proprietary systems?
Are there any lawsuits or tax liabilities lurking?
Also, your entity structure matters. S-corps, partnerships, C-corps—each can affect the deal structure and tax treatment.
Tip: Do a pre-sale legal and tax checkup at least a year in advance. Cleaning up now gives you stronger negotiating power later.
So, What You Can Do Now
You don’t need to be ready to sell tomorrow to start preparing today. The best exits come from owners who think like buyers—years in advance.
Start by buiding solid systems.
Assemble the right team.
Fix weak spots before a buyer ever walks in.
Even if a sale isn’t on the horizon, adopting a buyer’s mindset now boosts both valuation and day-to-day performance.
So in summary, it is in your best interest to start thinking like a buyer today to set yourself up for success when you are ready to transition your business. PE firms are always watching for what’s scalable, transferable, and de-risked. Want help getting there? Click the link below to book a strategy session with our team. We’ll help you stop guessing—and start seeing clearly & building value that lasts.
